-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JklLWLJvYsjUiM9xwafRMXbogO4Wc14Tb2BEdyQW7/fMHTPCLpV5wSPHUNXgiQWi kHCxxXMSpFqwcGCnQbVMqw== 0000750741-03-000002.txt : 20030723 0000750741-03-000002.hdr.sgml : 20030723 20030626183327 ACCESSION NUMBER: 0000750741-03-000002 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030627 EFFECTIVENESS DATE: 20030627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN EQUITY TRUST CENTRAL INDEX KEY: 0000750741 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04079 FILM NUMBER: 03759388 BUSINESS ADDRESS: STREET 1: 101 HUNTINGTON AVE STREET 2: 10TH FLOOR CITY: BOSTON STATE: MA ZIP: 02199 BUSINESS PHONE: 6173751700 MAIL ADDRESS: STREET 1: 101 HUNTINGTON AVENUE STREET 2: 10TH FLOOR CITY: BOSTON STATE: MA ZIP: 02199 FORMER COMPANY: FORMER CONFORMED NAME: HANCOCK JOHN SPECIAL EQUITIES FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HANCOCK JOHN SPECIAL EQUITIES TRUST DATE OF NAME CHANGE: 19901218 N-CSR 1 ncsr-equitytrust.txt JH EQUITY TRUST John Hancock Growth Trends Fund SEMI ANNUAL REPORT 4.30.03 Sign up for electronic delivery at www.jhancock.com/funds/edelivery [A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower, center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."] [A photo of Maureen R. Ford, Chairman and Chief Executive Officer, flush left next to first paragraph.] WELCOME Table of contents Your fund at a glance page 1 Managers' report page 2 A look at performance page 6 Growth of $10,000 page 7 Fund's investments page 8 Financial statements page 12 For your information page 25 Dear Fellow Shareholders, After a strong start to 2003, the stock market succumbed to the pressures of a weak economy, rising oil prices, concerns about corporate earnings and uncertainties about the war in Iraq. The tide turned in April, when the war ended and first-quarter corporate earnings came in better than expected. As a result, the major indexes all gained some ground year to date through April 30, 2003, with the Dow Jones Industrial Average returning 2.50%, the Standard & Poor's 500 Index returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%. Bonds, which have outperformed stocks for the last three years, continued their upward trend this year, as investors still sought their relative safety. After the jarring stock market losses of the last three years, it's a relief for investors to be reminded that the market is indeed cyclical, and does eventually move up -- not just down. But while the stock market has been clawing its way back, the ride has been extremely volatile. Uncertainty still abounds about the strength of the economy, geopolitical issues, corporate governance problems, rising unemployment and the sustainability of corporate earnings growth. And despite rallies late last year and in April, many investors are still so bruised and skeptical that they have remained on the sidelines. Even though the statistics suggest we might be emerging from this long, difficult bear market, we're not quite ready to call it history. While no one can predict when this bear market cycle will turn, investors can take charge of how they maneuver through such uncertain times. First, take a look at how your portfolio is allocated among stocks, bonds and cash to make sure it's in the proper balance. Work with your investment professional, who knows your long-term goals and can help keep you on the right track, rather than being lured by today's stars, which could wind up tomorrow's laggards. And as always, keep a long-term investment horizon. We believe this offers the best way for you to survive the tough times and reach your investment objectives. Sincerely, /S/ MAUREEN R. FORD Maureen R. Ford, Chairman and Chief Executive Officer This commentary reflects the chairman's views as of April 30, 2003. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term growth of capital by investing approxi- mately one-third of its assets in stocks of U.S. and foreign companies in each of the following sectors: financial services, health care and technology. Over the last six months * Stocks posted decent gains during the period, buoyed largely by a post-war surge in April 2003. * Technology stocks led the market's rally, while the health-care sector and financial stocks kept pace with the overall market. * The Fund's technology portfolio provided some of its best performers. [Bar chart with heading "John Hancock Growth Trends Fund." Under the heading is a note that reads "Fund performance for the six months ended April 30, 2003." The chart is scaled in increments of 2% with 0% at the bottom and 4% at the top. The first bar represents the 3.12% total return for Class A. The second bar represents the 2.94% total return for Class B. The third bar represents the 2.94% 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 holdings Financial Services 8.9% Citigroup 8.5% Goldman Sachs 8.3% American International Group 8.0% Marsh & McLennan 7.6% Wells Fargo Health Care 7.6% WebMD 7.5% Diagnostic Products 6.0% Medtronic 5.2% Thoratec 5.2% Zimmer Holdings Technology 11.3% Microsoft 8.7% IBM 6.3% Cisco Systems 5.8% EMC 4.6% Hewlett-Packard As a percentage of Financial Services, Health Care and Technology net assets, respectively, on April 30, 2003. MANAGERS' REPORT John Hancock Growth Trends Fund The stock market rebounded during the six months ended April 30, 2003, buoyed by optimism over the quick resolution of the war with Iraq and improving corporate earnings, as well as nascent hopes that the economy was on the mend. In this period, the Fund's Class A, Class B and Class C shares posted total returns of 3.12%, 2.94% and 2.94%, respectively, at net asset value. That compared with the 4.45% return of the average multi-cap growth fund, according to Lipper, Inc.1 Keep in mind that your net asset value will be different from the Fund's performance if you were not invested in the Fund for the entire period and did not reinvest all distributions. Please see pages six and seven for historical performance information. Technology stocks staged the strongest rebound, while the health-care and financial sectors performed in line with the overall stock market. FINANCIALS By James K. Schmidt, CFA, John Hancock Advisers, LLC Financial stocks as a group kept pace with the broad market, but in a reversal of the trend of the last two years, the more market-sensitive, higher-risk financial companies, such as brokerage firms, did better than the regional banks. Our best performers came from companies that had an emphasis on mortgage banking and fixed-income activities, since low interest rates continued to propel refinancing activity by both individuals and corporations. Bond trading activity was strong as investors still preferred bonds over stocks, and low rates and a weak equity IPO market sparked a record wave of bond issuance by corporations. These trends boosted our holdings in investment bankers Legg Mason and Goldman Sachs, and financial giant Citigroup. "...the more market- sensitive, higher-risk financial companies ... did better than the regional banks..." The Fund's financial portfolio was held back by some disappointments among our top holdings. State Street pre-announced lower-than-expected earnings, and that hit the stocks of other more market-sensitive names such as Mellon Financial. Fifth Third Bancorp had issues with regulators surrounding its operational infrastructure. Although not a top holding, regional bank BB&T's stock fell hard after it announced its intent to buy First Virginia in a deal the market considered too rich. We remain optimistic about the prospects for financial stocks, especially those financial companies that we believe can benefit from an improving economy and stock market, such as brokers, asset managers and trust and processing banks. HEALTH CARE By Jordan Schreiber, CFA, Mercury Advisors Health-care companies performed in line with the overall stock market during the period, although various sub-sectors of the industry performed quite well. On the plus side, medical technology holding Zimmer Holdings, a leading orthopedic device company, continued to benefit from increased use of less invasive orthopedic procedures, which it has pioneered. Our overweighting in the health-care service sector, particularly HMOs, also helped performance. The companies in that sub-sector benefited from the low incidence of influenza during this past winter and provided superior performance. One particular standout was Mid Atlantic Medical Services, Inc., a Maryland-based HMO. Elsewhere in the health-care service area, we enjoyed good returns from Anthem, Inc., one of the nation's largest health benefits companies, which generated strong revenue and earnings growth. The portfolio also benefited from its meaningful exposure to the biotech area, including companies such as Amgen and Neurocrine Biosciences. "Our overweighting in the health-care service sector, particularly HMOs, also helped performance." [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Medical 24%, the second is Computers 20%, the third Banks-United States 13%, the fourth Finance 11% and the fifth Electronics 8%.] Disappointments during the period included our stake in Tenet Health Care -- which we sold when its stock came under pressure due to a federal investigation of the company's Medicare patient selection practices. Baxter International, which we also sold, was another disappointment due in part to soft sales of its key blood therapy products. Looking ahead, we plan to remain diversified within the health-care sector so as to minimize risk. [Pie chart at middle of page with heading "Portfolio allocation As a percentage of net assets on 4-30-03." The chart is divided into four sections (from top to left): Technology 34%, Finance 33%, Medical 32% and Short-term investments & other 1%.] TECHNOLOGY By Anurag Pandit, CFA, John Hancock Advisers, LLC On January 1, 2003, Anurag Pandit was appointed portfolio manager of the technology portion of the Fund. Mr. Pandit, a vice president and portfolio manager for John Hancock Advisers, currently manages John Hancock Multi Cap Growth Fund and co-manages John Hancock Small Cap Growth Fund. He began his business career in 1984. After a long dry spell, pent-up demand for technology kicked off a rally for this struggling group. Along with much-needed corporate spending, rock-bottom valuations set the stage for strong performance. [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 Zimmer Holdings followed by an up arrow with the phrase "Strong demand for less invasive orthopedic procedures." The second listing is EMC followed by an up arrow with the phrase "Boosted by strong fundamentals and technology rally." The third listing is Fifth Third Bancorp followed by a down arrow with the phrase "Market punishes stock over regulatory issues."] Software companies benefited the most from corporate spending, since software enables clients to leverage existing systems. Citrix Systems, a supplier of application server software, was one of our best performers in this group. Rational Software, which we sold, was also a positive for the Fund, as IBM paid a premium to acquire this company. In addition, storage companies like EMC gained ground because of strong corporate demand. In spite of the last six months' performance, many areas within technology remain distressed. For that reason, we increased our exposure to companies such as Microsoft and IBM, because the dominant companies are more likely to gain market share in a difficult environment. At the same time, we scaled back on some of the smaller and more troubled names in the portfolio. For example, we sold Siebel Systems, which specializes in customer relationship management. We believed that demand had peaked and management guidance was far too aggressive. We also de-emphasized some mixed-signal semi-conductor companies because of their high valuations. "After a long dry spell, pent-up demand for tech- nology kicked off a rally..." We are optimistic about technology companies going forward, and believe that they will continue to benefit from pent-up demand. Cautious earnings guidance has also made it easier for companies to meet -- or beat -- expectations. 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. Sector investing is subject to greater risks than the market as a whole. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. A LOOK AT PERFORMANCE For the period ended April 30, 2003 The index used for comparison is the Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded common stocks. It is not possible to invest in an index. Class A Class B Class C Index Inception date 9-22-00 9-22-00 9-22-00 -- Average annual returns with maximum sales charge (POP) One year -24.22% -24.70% -22.34% -13.30% Since inception -27.02% -26.97% -26.39% -14.86% Cumulative total returns with maximum sales charge (POP) Six months -2.11% -2.06% 1.03% 4.47% One year -24.22% -24.70% -22.34% -13.30% Since inception -55.96% -55.86% -54.95% -34.22% Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. The return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. Index figures do not reflect sales charges and would be lower if they did. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Fund's performance results reflect any applicable expense reductions, without which the expenses would increase and results would have been less favorable. These reductions can be terminated in the future. See the prospectus for details. GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the Standard & Poor's 500 Index. 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 $6,578 as of April 30, 2003. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock Growth Trends Fund, before sales charge, and is equal to $4,638 as of April 30, 2003. The third line represents the value of the same hypothetical investment made in the John Hancock Growth Trends Fund, after sales charge, and is equal to $4,404 as of April 30, 2003. Class B Class C 1 Period beginning 9-22-00 9-22-00 Without sales charge $4,550 $4,550 With maximum sales charge $4,414 $4,505 Index $6,578 $6,578 Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B and Class C shares, respectively, as of April 30, 2003. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. 1 No contingent deferred sales charge applicable. FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2003 (unaudited) This schedule is divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's cash position, are listed last.
SHARES ISSUER VALUE COMMON STOCKS (98.75%) $188,455,049 (Cost $216,581,224) Advertising 0.51% 981,650 29,000 Getty Images, Inc.* 981,650 Banks -- United States 13.00% 24,803,519 64,500 Bank of America Corp. 4,776,225 33,000 BB&T Corp. 1,075,800 42,000 Charter One Financial, Inc. 1,220,100 26,000 City National Corp. 1,070,420 88,900 Fifth Third Bancorp 4,381,881 122,000 Mellon Financial Corp. 3,226,900 155,000 SouthTrust Corp. 4,163,455 101,300 Wells Fargo & Co. 4,888,738 Broker Services 2.84% 5,426,850 71,500 Goldman Sachs Group, Inc. (The) 5,426,850 Computers 20.19% 38,536,734 52,250 Advent Software, Inc.*+ 657,828 112,400 BEA Systems, Inc.* 1,203,804 81,350 Borland Software Corp.* 737,844 266,700 Cisco Systems, Inc.* 4,011,168 150,000 Citrix Systems, Inc.*+ 2,844,000 67,750 Dell Computer Corp.* 1,958,652 409,436 EMC Corp.* 3,721,773 181,015 Hewlett-Packard Co. 2,950,545 65,245 International Business Machines Corp. 5,539,301 21,958 Lexmark International, Inc.* 1,636,091 67,900 Macromedia, Inc.* 856,219 59,600 McDATA Corp. (Class A)*+ 630,568 35,550 Mercury Interactive Corp.*+ 1,206,567 282,300 Microsoft Corp. 7,218,411 150,000 Network Associates, Inc.*+ 1,714,500 17,000 Symantec Corp.* 747,150 72,650 VeriSign, Inc.* 902,313 Diversified Operations 0.52% 1,001,916 10,800 eBay, Inc.* 1,001,916 Electronics 8.07% 15,409,073 175,000 Applied Materials, Inc.* 2,555,000 194,050 Flextronics International Ltd.* (Singapore) 1,697,938 117,800 Intel Corp. 2,167,520 50,000 KLA-Tencor Corp.*+ 2,050,000 81,890 Micron Technology, Inc.*+ 696,065 36,000 Photronics, Inc. * 452,520 185,000 RF Micro Devices, Inc.*+ 878,750 225,565 Taiwan Semiconductor Manufacturing Co. Ltd.* American Depositary Receipts (ADR) (Taiwan)+ 1,887,979 89,945 Texas Instruments, Inc. 1,663,083 61,800 VERITAS Software Corp.* 1,360,218 Finance 10.93% 20,855,477 120,200 American Express Co. 4,550,772 144,700 Citigroup, Inc. 5,679,475 71,000 Legg Mason, Inc. 3,855,300 171,000 MBNA Corp. 3,231,900 101,000 State Street Corp. 3,538,030 Insurance 5.48% 10,455,092 91,350 American International Group, Inc. 5,293,732 108,250 Marsh & McLennan Cos., Inc. 5,161,360 Media 0.41% 777,229 56,815 AOL Time Warner, Inc.*+ 777,229 Medical 24.40% 46,567,752 50,000 Amgen, Inc.* 3,065,500 30,000 Anthem, Inc.* 2,059,200 60,000 BioMarin Pharmaceutical, Inc.* 658,800 60,000 Boston Scientific Corp.* 2,583,000 100,000 Caremark Rx, Inc.* 1,991,000 20,000 Cerner Corp.* 399,600 20,700 CTI Molecular Imaging, Inc.* 380,052 120,000 Diagnostic Products Corp. 4,740,000 145,000 Emisphere Technologies, Inc.* 439,350 60,000 Genzyme Corp.* 2,416,800 20,000 Johnson & Johnson 1,127,200 140,000 Lexicon Genetics, Inc.* 700,000 80,000 Manor Care, Inc.* 1,556,000 80,000 Medtronic, Inc. 3,819,200 52,000 Mid Atlantic Medical Services, Inc.* 2,264,600 100,000 Millennium Pharmaceuticals, Inc.* 1,100,000 60,000 Neurocrine Biosciences, Inc.* 2,715,000 150,000 Smith & Nephew Plc (United Kingdom) 1,000,312 240,000 Thoratec Corp.* 3,300,000 14,200 Trimeris, Inc.* 630,338 500,000 WebMD Corp.* 4,820,000 20,000 Wellpoint Health Networks, Inc.* 1,518,800 70,000 Zimmer Holdings, Inc.* 3,283,000 Medical -- Drugs 7.65% 14,589,819 80,000 Abbott Laboratories 3,250,400 50,000 Biovail Corp.* (Canada) 1,807,500 40,000 Celgene Corp.* 1,064,400 80,000 Cubist Pharmaceuticals, Inc.* 738,400 100,000 Pfizer, Inc. 3,075,000 800,000 SkyePharma Plc* (United Kingdom) 632,911 30,800 Taro Pharmaceutical Industries Ltd.* (Israel) 1,409,408 60,000 Wyeth 2,611,800 Mortgage Banking 0.49% 926,400 16,000 Freddie Mac 926,400 Telecommunications 4.26% 8,123,538 275,000 AT&T Wireless Services, Inc.* 1,776,500 124,809 Motorola, Inc. 987,239 179,700 Nextel Partners, Inc. (Class A)*+ 1,044,057 116,113 Nokia Oyj (ADR) (Finland)+ 1,923,992 75,000 QUALCOMM, Inc.* 2,391,750 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 9.80% $18,712,214 (Cost $18,712,214) Joint Repurchase Agreement 1.41% Investment in a joint repurchase agreement transaction with State Street Bank & Trust Co.-- Dated 04-30-03, due 05-01-03 (Secured by U.S. Treasury Inflation Indexed Bond 3.875% due 04-15-29, U.S. Treasury Inflation Indexed Notes 3.375% due 01-15-07 and 3.000% due 07-15-12) 1.280% $2,688 2,688,000 Cash Equivalents 8.39% AIM Cash Investment Trust ** 16,024,214 16,024,214 TOTAL INVESTMENTS 108.55% $207,167,263 OTHER ASSETS AND LIABILITIES, NET (8.55%) ($16,320,758) TOTAL NET ASSETS 100.00% $190,846,505
+ All or a portion of this security is on loan as of April 30, 2003. * Non-income-producing security. ** Represents investment of security lending collateral. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. ASSETS AND LIABILITIES April 30, 2003 (unaudited) 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 $235,293,438) including $15,633,653 of securities loaned $207,167,263 Receivable for investments sold 1,271,737 Receivable for shares sold 110,399 Dividends and interest receivable 129,148 Other assets 4,164 Total assets 208,682,711 LIABILITIES Due to custodian 75,948 Payable for investments purchased 977,362 Payable for shares repurchased 433,755 Payable for securities on loan 16,024,214 Payable to affiliates 241,762 Other payables and accrued expenses 83,165 Total liabilities 17,836,206 NET ASSETS Capital paid-in 438,093,932 Accumulated net realized loss on investments, written options and foreign currency transactions (218,032,103) Net unrealized depreciation of investments, written options and translation of assets and liabilities in foreign currencies (28,125,801) Accumulated net investment loss (1,089,523) Net assets $190,846,505 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($59,390,438 [DIV] 12,835,433 shares) $4.63 Class B ($94,138,546 [DIV] 20,710,932 shares) $4.55 Class C ($37,317,521 [DIV] 8,210,104 shares) $4.55 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($4.63 [DIV] 95%) $4.87 Class C ($4.55 [DIV] 99%) $4.60 1 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. OPERATIONS For the period ended April 30, 2003 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in operat- ing the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Dividends (net of foreign withholding taxes of $7,315) $959,482 Interest (includes securities lending income of $14,014) 25,202 Total investment income 984,684 EXPENSES Investment management fee 971,465 Class A distribution and service fee 90,304 Class B distribution and service fee 478,234 Class C distribution and service fee 192,217 Transfer agent fee 592,753 Custodian fee 38,873 Accounting and legal services fee 25,982 Printing 17,681 Interest expense 10,768 Auditing fee 10,166 Trustees' fee 6,128 Miscellaneous 4,288 Legal fee 1,292 Total expenses 2,440,151 Less expense reductions (367,759) Net expenses 2,072,392 Net investment loss (1,087,708) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on Investments (45,343,551) Written options 45,465 Foreign currency transactions (8,623) Change in net unrealized appreciation (depreciation) of Investments 51,329,833 Written options 92,535 Translation of assets and liabilities in foreign currencies 294 Net realized and unrealized gain 6,115,953 Increase in net assets from operations $5,028,245 1 Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. CHANGES IN NET ASSETS This Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous period. The dif- ference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and any increase or decrease in money share- holders invested in the Fund. YEAR PERIOD ENDED ENDED 10-31-02 4-30-03 1 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($4,157,705) ($1,087,708) Net realized loss (87,570,145) (45,306,709) Change in net unrealized appreciation (depreciation) 15,309,899 51,422,662 Increase (decrease) in net assets resulting from operations (76,417,951) 5,028,245 From Fund share transactions (44,607,161) (22,600,371) NET ASSETS Beginning of period 329,443,743 208,418,631 End of period 1,2 $208,418,631 $190,846,505 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Accumulated net investment loss of $1,815 and $1,089,523 respectively. See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS A SHARES The Financial Highlights show how the Fund's net asset value for a share has changed since the end of the previous period. PERIOD ENDED 10-31-00 1 10-31-01 10-31-02 4-30-03 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $9.54 $5.87 $4.49 Net investment income (loss)3 0.01 (0.05) (0.05) (0.01) Net realized and unrealized gain (loss) on investments (0.47) (3.61) (1.33) 0.15 Total from investment operations (0.46) (3.66) (1.38) 0.14 Less distributions From net investment income -- (0.01) -- -- Net asset value, end of period $9.54 $5.87 $4.49 $4.63 Total return 4,5 (%) (4.60)6 (38.37) (23.51) 3.12 6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $86 $99 $65 $59 Ratio of expenses to average net assets (%) 1.65 7 1.65 1.65 1.65 7 Ratio of adjusted expenses to average net assets 8 (%) 1.75 7 1.85 1.88 2.03 7 Ratio of net investment income (loss) to average net assets (%) 0.57 7 (0.70) (0.91) (0.64)7 Portfolio turnover (%) 11 116 68 71
See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-00 1 10-31-01 10-31-02 4-30-03 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $9.54 $5.83 $4.42 Net investment loss 3 -- 9 (0.10) (0.09) (0.03) Net realized and unrealized gain (loss) on investments (0.46) (3.61) (1.32) 0.16 Total from investment operations (0.46) (3.71) (1.41) 0.13 Net asset value, end of period $9.54 $5.83 $4.42 $4.55 Total return 4,5 (%) (4.60)6 (38.89) (24.19) 2.94 6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $125 $161 $102 $94 Ratio of expenses to average net assets (%) 2.34 7 2.35 2.35 2.35 7 Ratio of adjusted expenses to average net assets 8 (%) 2.44 7 2.55 2.58 2.73 7 Ratio of net investment loss to average net assets (%) (0.13)7 (1.40) (1.61) (1.34)7 Portfolio turnover (%) 11 116 68 71
See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-00 1 10-31-01 10-31-02 4-30-03 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $9.54 $5.83 $4.42 Net investment loss 3 -- 9 (0.10) (0.09) (0.03) Net realized and unrealized gain (loss) on investments (0.46) (3.61) (1.32) 0.16 Total from investment operations (0.46) (3.71) (1.41) 0.13 Net asset value, end of period $9.54 $5.83 $4.42 $4.55 Total return 4,5 (%) (4.60)6 (38.89) (24.19) 2.94 6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $53 $69 $42 $37 Ratio of expenses to average net assets (%) 2.34 7 2.35 2.35 2.35 7 Ratio of adjusted expenses to average net assets 8 (%) 2.44 7 2.55 2.58 2.73 7 Ratio of net investment loss to average net assets (%) (0.13)7 (1.40) (1.61) (1.34)7 Portfolio turnover (%) 11 116 68 71 1 Class A, Class B and Class C shares began operations on 9-22-00. 2 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 3 Based on average of the shares outstanding. 4 Assumes dividend reinvestment and does not reflect the effect of sales charges. 5 Total returns would have been lower had certain expenses not been reduced during the periods shown. 6 Not annualized. 7 Annualized. 8 Does not take into consideration expense reductions during the periods shown. 9 Less than $0.01 per share.
See notes to financial statements. NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock Growth Trends Fund (the "Fund") is a diversified series of John Hancock Equity 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 Fund will invest in a number of industry groups without concentration in any particular industry. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or, if quotations are not readily available, or the value has been materially affected by events occurring after the closing of a foreign market, at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. Investments in AIM Cash Investment Trust are valued at their net asset value each business day. All portfolio transactions initially expressed in terms of foreign currencies have been translated into U.S. dollars as described in "Foreign currency translation" below. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Foreign currency translation All assets or liabilities initially expressed in terms of foreign currencies are translated into U.S. dollars based on London currency exchange quotations as of 5:00 P.M., London time, on the date of any determination of the net asset value of the Fund. Transactions affecting statement of operations accounts and net realized gain (loss) on invest ments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange rates. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Capital gains realized on some foreign securities are subject to foreign taxes, which are accrued as applicable. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate with other funds managed by the Adviser in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund, based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2003. Options The Fund may enter into option contracts. Listed options will be valued at the last quoted sales price on the exchange on which they are primarily traded. Over-the-counter options are valued at the mean between the last bid and asked prices. Upon the writing of a call or put option, an amount equal to the premium received by the Fund will be included in the Statement of Assets and Liabilities as an asset and corresponding liability. The amount of the liability will be subsequently marked to market to reflect the current market value of the written option. The Fund may use option contracts to manage its exposure to the price volatility of financial instruments. Writing puts and buying calls will tend to increase the Fund's exposure to the underlying instrument and buying puts and writing calls will tend to decrease the Fund's exposure to the underlying instrument, or hedge other Fund investments. The maximum exposure to loss for any purchased options will be limited to the premium initially paid for the option. In all other cases, the face (or "notional") amount of each contract at value will reflect the maximum exposure of the Fund in these contracts, but the actual exposure will be limited to the change in value of the contract over the period the contract remains open. Risks may also arise if counterparties do not perform under the contracts' terms ("credit risk") or if the Fund is unable to offset a contract with a counterparty on a timely basis ("liquidity risk"). Exchange-traded options have minimal credit risk as the exchanges act as counterparties to each transaction, and only present liquidity risk in highly unusual market conditions. To minimize credit and liquidity risks in over-the-counter option contracts, the Fund will continuously monitor the creditworthiness of all its counterparties. At any particular time, except for purchased options, market or credit risk may involve amounts in excess of those reflected in the Fund's Statement of Assets and Liabilities. Written options for the period ended April 30, 2003 were as follows: NUMBER OF CONTRACTS PREMIUMS RECEIVED - ---------------------------------------------------------------------------- Outstanding, beginning of period 200 $45,465 Options expired (200) (45,465) Outstanding, end of period -- -- Securities lending The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. These fees are included in interest income. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially. On April 30, 2003, the Fund loaned securities having a market value of $15,633,653 collateralized by cash in the amount of $16,024,214. The cash collateral was invested in a short-term instrument. Forward foreign currency exchange contracts The Fund may enter into forward foreign currency exchange contracts as a hedge against the effect of fluctuations in currency exchange rates. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date at a set price. The aggregate principal amounts of the contracts are marked to market daily at the applicable foreign currency exchange rates. Any resulting unrealized gains and losses are included in the determination of the Fund's daily net assets. The Fund records realized gains and losses at the time the forward foreign currency exchange contracts are closed out. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of the contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. These contracts involve market or credit risk in excess of the unrealized gain or loss reflected in the Fund's statement of assets and liabilities. The Fund may also purchase and sell forward contracts to facilitate the settlement of foreign currency denominated portfolio transactions, under which it intends to take delivery of the foreign currency. Such contracts normally involve no market risk if they are offset by the currency amount of the underlying transactions. The Fund had no open forward foreign currency exchange contracts on April 30, 2003. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $172,236,418 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 -- $307,599, October 31, 2009 -- $84,312,445 and October 31, 2010 -- $87,616,374. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser at an annual rate of 1.00% of the Fund's average daily net asset value. The Adviser has a subadvisory agreement with Mercury Advisors. The Adviser also had a subadvisory agreement with American Fund Advisors, Inc., which was terminated on December 31, 2002. The Fund is not responsible for payment of the subadvisory fees. The Adviser has agreed to limit the Fund's expenses, excluding the distribution and service fees, to 1.35% of the Fund's average daily net assets, at least until February 28, 2004. Accordingly, the expense reduction amounted to $367,759 for the period ended April 30, 2003. The Adviser reserves the right to terminate this limitation in the future. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $68,559 with regard to sales of Class A shares. Of this amount, $9,750 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $47,771 was paid as sales commissions to unrelated broker-dealers and $11,038 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $7,852 with regard to sales of Class C shares. Of this amount, $7,714 was paid as sales commissions to unrelated broker-dealers and $138 was paid as sales commissions to sales personnel of Signator Investors. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, CDSCs received by JH Funds amounted to $285,360 for Class B shares and $2,117 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average net assets of the Fund. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investments as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. NOTE C Fund share transactions This listing illustrates the number of Fund shares sold and repurchased during the last two periods, along with the corresponding dollar value. The Fund has an unlimited number of shares authorized with no par value. YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 1 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 3,686,868 $22,373,635 904,506 $4,068,293 Repurchased (6,138,410) (34,074,737) (2,499,328) (11,106,532) Net decrease (2,451,542) ($11,701,102) (1,594,822) ($7,038,239) CLASS B SHARES Sold 3,843,229 $23,080,944 843,405 $3,736,994 Repurchased (8,380,789) (43,943,566) (3,240,656) (14,150,301) Net decrease (4,537,560) ($20,862,622) (2,397,251) ($10,413,307) CLASS C SHARES Sold 1,748,760 $10,660,644 255,994 $1,128,004 Repurchased (4,240,501) (22,704,081) (1,436,775) (6,276,829) Net decrease (2,491,741) ($12,043,437) (1,180,781) ($5,148,825) NET DECREASE (9,480,843) ($44,607,161) (5,172,854) ($22,600,371) 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $74,101,589 and $92,662,932, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $235,781,788. Gross unrealized appreciation and depreciation of investments aggregated $14,299,915 and $42,914,440, respectively, resulting in net unrealized depreciation of $28,614,525. The difference between book basis and tax basis net unrealized depreciation of investments is attributable primarily to the tax deferral of losses on wash sales. FOR YOUR INFORMATION TRUSTEES Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt *Members of the Audit Committee OFFICERS Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 SUB-INVESTMENT ADVISER Mercury Advisors 800 Scudders Mill Road Plainsboro, New Jersey 08536 PRINCIPAL DISTRIBUTOR John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By express mail John Hancock Signature Services, Inc. Attn: Mutual Fund Image Operations 529 Main Street Charlestown, MA 02129 Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhancock.com/funds/edelivery This report is for the information of the shareholders of the John Hancock Growth Trends Fund. 460SA 4/03 6/03 John Hancock Large Cap Spectrum Fund SEMI ANNUAL REPORT 4.30.03 Sign up for electronic delivery at www.jhancock.com/funds/edelivery [A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower, center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."] [A photo of Maureen R. Ford, Chairman and Chief Executive Officer, flush left next to first paragraph.] WELCOME Table of contents Your fund at a glance page 1 Managers' report page 2 A look at performance page 6 Growth of $10,000 page 7 Fund's investments page 8 Financial statements page 12 For your information page 25 Dear Fellow Shareholders, After a strong start to 2003, the stock market succumbed to the pressures of a weak economy, rising oil prices, concerns about corporate earnings and uncertainties about the war in Iraq. The tide turned in April, when the war ended and first-quarter corporate earnings came in better than expected. As a result, the major indexes all gained some ground year to date through April 30, 2003, with the Dow Jones Industrial Average returning 2.50%, the Standard & Poor's 500 Index returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%. Bonds, which have outperformed stocks for the last three years, continued their upward trend this year, as investors still sought their relative safety. After the jarring stock market losses of the last three years, it's a relief for investors to be reminded that the market is indeed cyclical, and does eventually move up -- not just down. But while the stock market has been clawing its way back, the ride has been extremely volatile. Uncertainty still abounds about the strength of the economy, geopolitical issues, corporate governance problems, rising unemployment and the sustainability of corporate earnings growth. And despite rallies late last year and in April, many investors are still so bruised and skeptical that they have remained on the sidelines. Even though the statistics suggest we might be emerging from this long, difficult bear market, we're not quite ready to call it history. While no one can predict when this bear market cycle will turn, investors can take charge of how they maneuver through such uncertain times. First, take a look at how your portfolio is allocated among stocks, bonds and cash to make sure it's in the proper balance. Work with your investment professional, who knows your long-term goals and can help keep you on the right track, rather than being lured by today's stars, which could wind up tomorrow's laggards. And as always, keep a long-term investment horizon. We believe this offers the best way for you to survive the tough times and reach your investment objectives. Sincerely, /S/ MAUREEN R. FORD Maureen R. Ford, Chairman and Chief Executive Officer This commentary reflects the chairman's views as of April 30, 2003. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term growth of capital by normally investing at least 80% of its assets in stocks of large- capitalization companies. The Fund's assets are managed according to three separate investment strategies -- growth, core and value. Over the last six months * Stock prices rebounded following a period of prolonged pessimism related to war and economic uncertainty. * Large-cap, multinational stocks benefited from the weak U.S. dollar. * The Fund's value strategy helped it post especially strong gains as bargain stocks made strong comebacks. [Bar chart with heading "John Hancock Large Cap Spectrum Fund." Under the heading is a note that reads "Fund performance for the six months ended April 30, 2003." The chart is scaled in increments of 1% with 0% at the bottom and 3% at the top. The first bar represents the 2.22% total return for Class A. The second bar represents the 1.83% total return for Class B. The third bar represents the 1.83% total return for Class C. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested.] Top 10 holdings 3.8% Microsoft Corp. 3.8% Pfizer, Inc. 3.5% General Electric Co. 3.4% Citigroup, Inc. 2.5% Wal-Mart Stores, Inc. 2.4% Freddie Mac 2.3% Bank of America Corp. 2.0% Viacom, Inc. 1.8% Goldman Sachs Group, Inc. (The) 1.8% American International Group, Inc. As a percentage of net assets on April 30, 2003. MANAGERS' REPORT John Hancock Large Cap Spectrum Fund Despite continued volatility, stocks closed up for the six months ended April 30, 2003, with the Standard & Poor's 500 Index returning 4.47%. After rallying late last year, stock prices trended down as the war with Iraq, higher oil prices, the SARS virus and economic uncertainty dominated headlines. Investors favored cheap stocks with less downside risk. In April, however, stocks rebounded nicely, following success in Iraq, a decline in oil prices and better-than-expected earnings reports. Large, multinational stocks benefited from the weak U.S. dollar. The Russell 1000 Value Index returned 5.25% for the six-month period, slightly ahead of the Russell 1000 Growth Index's 4.28% return. PERFORMANCE AND STRATEGY REVIEW John Hancock Large Cap Spectrum Fund's Class A, Class B, and Class C shares returned 2.22%, 1.83% and 1.83%, respectively, at net asset value over the six-month period ended April 30, 2003. By comparison, the average large-cap core fund returned 2.96%, according to Lipper, Inc.1 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 distributions. See pages six and seven for historical performance information. "The core portfolio posted a modestly positive return..." In a volatile market, our strategy of allocating 50% of the Fund's assets to a core portfolio and 25% each to growth and value stocks helped the Fund maintain exposure to the best-performing asset classes. LARGE CAP CORE STRATEGY by Paul J. Berlinguet, John Hancock Advisers The core portfolio posted a modestly positive return, but lagged the S&P 500 due to stock selection in the financial, consumer staples and technology sectors. In the financial area, we focused on banks with more predictable earnings growth, which trailed more economically sensitive brokers. State Street, which handles transactions and custodial services for investment managers, was a particular disappointment as investors worried about a recent acquisition. In the consumer staples sector, Kraft Foods declined due to problems at parent company Altria, while Coca-Cola suffered from slower sales growth. Our technology investments focused on market leaders with strong balance sheets, such as Microsoft, which lagged more aggressive names. "Our focus on high-quality growth stocks hampered performance as low- quality stocks rallied early..." Positive returns came from the health-care sector, where we targeted large-cap pharmaceuticals with cheap stock prices, such as Merck, as well as more expensive equipment and service stocks with the potential for faster growth. Our slightly above-average stake in consumer discretionary stocks also did well, thanks to Wal-Mart Stores, which continued to gain market share, and Comcast, a leading cable provider benefiting from improved financial controls. Selected financials, including Travelers Property Casualty and Citigroup, also helped returns as their outlooks brightened. LARGE CAP GROWTH STRATEGY by Stephanie Simon, CFA, AllianceBernstein The portfolio, which is comprised of mainly high-quality growth stocks, modestly underperformed the Russell 1000 Growth Index during an unusual market rally of lower-quality stocks late in 2002. In the health-care sector, Tenet Healthcare sank amid revelations of deceptive pricing practices, causing us to sell. Cardinal Health, a drug distributor, suffered amid revised growth prospects, while Pfizer, a large pharmaceutical company, disappointed as investors worried about future patent expirations. Our strongest performers were economically sensitive consumer discretionary and industrial stocks, including Comcast and General Electric. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is medical 15%, the second is Retail 10%, the third Computers 10%, the fourth Finance 8%, and the fifth Banks-United States 8%.] We kept an above-average stake in financials, where returns were mixed. One of our largest and best investments was Citigroup. MBNA, the credit card company, however, slid as investors reacted to deterioration in a small segment of its business, even as prospects for its core business strengthened. Freddie Mac, a government-backed mortgage lender, tumbled amid concerns that it would suffer as the refinancing cycle ended. American International Group, a large multi-line insurer, also declined as weak financial markets hurt certain business units. We believe prospects for all remain strong and even added to our investment in MBNA. We kept a below-average stake in technology where we found little evidence of recovery. We did, however, own Intel, which rallied on the expectation that corporations would soon upgrade their personal computers. LARGE CAP VALUE STRATEGY by Marilyn Fedak, CFA, AllianceBernstein The value portfolio, which focuses on identifying and selecting bargains, nicely outpaced the Russell 1000 Value Index. Stock selection was strong across most sectors. Within financials, we focused on regional banks and savings and loans (S&Ls) that had tumbled on concerns that the weak economy would increase loan losses. When earnings came in better than expected, stocks like Washington Mutual, a leading S&L, rallied nicely. Other top performers included Lehman Brothers and Morgan Stanley, investment bankers that benefited from strong cost controls and an improving market outlook. [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 Nortel Networks followed by an up arrow with the phrase "Improved balance sheet, lifting of pessimism." The second listing is Johnson & Johnson followed by a sideways arrow with the phrase "Awaiting approval of new drug-coated stents." The third listing is American International Group followed by a down arrow with the phrase "Weak financial markets, increased liability claims."] Our above-average stake in the beaten-down technology sector also helped performance, as many of these stocks rallied. Our strongest returns came from telecommunications equipment companies, such as Nortel Networks and Corning, that had strengthened their balance sheets. Other telecom-related stocks, however, disappointed, including Tellabs, a well- capitalized equipment company, and SBC Communications, a service provider. Schering-Plough, a large pharmaceutical company, also faltered amid concerns that its antihistamine products would lose market share. "The value portfolio...nicely outpaced the Russell 1000 Value Index." MANAGERS' OUTLOOK We believe the market outlook is improving now that the war with Iraq is over. Oil prices have come down, lowering expenses for both consumers and corporations. Although unemployment still hovers around 6%, wage and income growth has continued, and inflation has remained benign. Corporations have reaped strong productivity gains, while recent economic data appears encouraging. In our view, investors' risk aversion has made long-term expected returns for stocks very attractive compared to bonds. We think these trends -- along with reasonable valuations and a weakening U.S. dollar -- bode well for large-cap stocks. This commentary reflects the views of the portfolio managers through the end of the Fund's period discussed in this report. The managers' statements reflect their own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. A LOOK AT PERFORMANCE For the period ended April 30, 2003 The index used for comparison is the Standard & Poor's 500 Index, an unman- aged index that includes 500 widely traded common stocks. It is not possible to invest in an index. Class A Class B Class C Index Inception date 2-25-02 2-25-02 2-25-02 -- Average annual returns with maximum sales charge (POP) One year -21.21% -21.71% -19.26% -13.30% Since inception -22.20% -21.99% -19.91% -13.49% Cumulative total returns with maximum sales charge (POP) Six months -2.85% -3.17% -0.21% 4.47% One year -21.21% -21.71% -19.26% -13.30% Since inception -25.55% -25.31% -22.97% -15.66% Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. The return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. Index figures do not reflect sales charges and would be lower if they did. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Fund's performance results reflect any applicable expense reductions, without which the expenses would increase and results would have been less favorable. These reductions can be terminated in the future. See the prospectus for details. GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the Standard & Poor's 500 Index. 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 $8,434 as of April 30, 2003. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock Large Cap Spectrum Fund, before sales charge, and is equal to $7,840 as of April 30, 2003. The third line represents the value of the same hypothetical investment made in the John Hancock Large Cap Spectrum Fund, after sales charge, and is equal to $7,445 as of April 30, 2003. Class B Class C 1 Period beginning 2-25-02 2-25-02 Without sales charge $7,780 $7,780 With maximum sales charge $7,469 $7,702 Index $8,434 $8,434 Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B and Class C shares, respectively, as of April 30, 2003. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. 1 No contingent deferred sales charge applicable. FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2003 (unaudited) This schedule is divided into two main categories: common stocks and short-term investments. Stocks are further broken down by industry group. Short-term investments, which represent the Fund's cash position, are listed last.
SHARES ISSUER VALUE COMMON STOCKS 98.88% $17,516,703 (Cost $18,498,264) Advertising 0.70% 123,800 2,000 Omnicom Group, Inc. 123,800 Automobiles/Trucks 0.94% 167,033 1,400 Lear Corp.* 55,636 1,900 Magna International, Inc. (Class A) (Canada) 111,397 Banks -- United States 7.53% 1,333,194 5,500 Bank of America Corp. 407,275 4,800 FleetBoston Financial Corp. 127,296 3,000 J.P. Morgan Chase & Co. 88,050 3,000 National City Corp. 89,880 2,850 State Street Corp. 99,836 7,600 U.S. Bancorp 168,340 4,300 Wachovia Corp. 164,303 3,900 Wells Fargo & Co. 188,214 Beverages 1.65% 292,980 1,500 Anheuser-Busch Cos., Inc. 74,820 5,400 Coca-Cola Co. (The) 218,160 Broker Services 3.57% 632,769 4,300 Goldman Sachs Group, Inc. (The) 326,370 2,200 Lehman Brothers Holdings, Inc. 138,534 1,800 Merrill Lynch & Co., Inc. 73,890 2,100 Morgan Stanley 93,975 Building 0.13% 23,160 1,500 Georgia-Pacific Corp. 23,160 Chemicals 1.13% 199,971 3,600 Dow Chemical Co. (The) 117,504 1,700 PPG Industries, Inc. 82,467 Computers 9.62% 1,704,049 3,200 Affiliated Computer Services, Inc.* 152,640 10,600 Cisco Systems, Inc.* 159,424 6,100 Dell Computer Corp.* 176,351 1,500 Electronic Data Systems Corp. 27,225 17,800 Hewlett-Packard Co. 290,140 2,000 International Business Machines Corp. 169,800 1,800 Mercury Interactive Corp.* 61,092 26,100 Microsoft Corp. 667,377 Cosmetics & Personal Care 2.91% 515,449 1,000 Avon Products, Inc. 58,170 1,200 Colgate-Palmolive Co. 68,604 1,300 Estee Lauder Cos., Inc. (The) (Class A) 42,250 4,000 Gillette Co. (The) 121,800 2,500 Procter & Gamble Co. (The) 224,625 Diversified Operations 4.02% 712,568 700 3M Co. 88,228 21,200 General Electric Co. 624,340 Electronics 3.43% 607,591 6,000 Applied Materials, Inc.* 87,600 3,700 Avnet, Inc.* 47,175 15,100 Intel Corp. 277,840 1,200 KLA-Tencor Corp.* 49,200 11,500 Solectron Corp.* 36,685 5,900 Texas Instruments, Inc. 109,091 Finance 7.91% 1,400,390 2,500 American Express Co. 94,650 15,500 Citigroup, Inc. 608,375 2,000 Golden West Financial Corp. 150,840 15,750 MBNA Corp. 297,675 6,300 Washington Mutual, Inc. 248,850 Food 0.47% 83,430 2,700 Kraft Foods, Inc. (Class A) 83,430 Household 0.36% 63,551 2,085 Newell Rubbermaid, Inc. 63,551 Insurance 4.97% 880,710 5,400 American International Group, Inc. 312,930 1,900 Chubb Corp. (The) 100,491 4,800 CIGNA Corp. 251,040 13,324 Travelers Property Casualty Corp. (Class A) 216,249 Leisure 0.58% 102,178 4,700 Mattel, Inc. 102,178 Machinery 0.34% 59,360 1,600 Cooper Industries, Ltd. (Class A) 59,360 Media 6.42% 1,137,586 3,450 Clear Channel Communications, Inc.* 134,930 6,400 Comcast Corp. (Class A)* 204,224 8,400 Comcast Corp. (Special Class A)* 252,504 1,100 Gannett Co., Inc. 83,292 2,300 New York Times Co. (The) (Class A) 106,674 8,200 Viacom, Inc. (Class B)* 355,962 Medical 15.06% 2,667,402 4,450 Aetna, Inc. 221,610 1,500 Amgen, Inc.* 91,965 1,200 Bard (C.R.), Inc. 76,056 1,200 Barr Laboratories, Inc.* 66,720 1,500 Biovail Corp. (Canada)* 54,225 1,600 Cardinal Health, Inc. 88,448 2,500 Gilead Sciences, Inc.* 115,350 2,800 IDEC Pharmaceuticals Corp.* 91,700 4,400 Johnson & Johnson 247,984 4,594 Medtronic, Inc. 219,318 3,200 Merck & Co., Inc. 186,176 2,200 Novartis AG, American Depositary Receipt (ADR) (Switzerland) 86,856 21,700 Pfizer, Inc. 667,275 6,100 Schering-Plough Corp. 110,410 1,100 St. Jude Medical, Inc. * 57,706 3,100 UnitedHealth Group, Inc. 285,603 Mortgage Banking 3.22% 571,070 2,050 Fannie Mae 148,400 7,300 Freddie Mac 422,670 Oil & Gas 3.99% 706,677 2,200 BJ Services Co.* 80,322 4,600 ConocoPhillips 231,380 7,000 Exxon Mobil Corp. 246,400 3,500 Occidental Petroleum Corp. 104,475 1,200 Valero Energy Corp. 44,100 Paper & Paper Products 0.69% 122,668 5,200 MeadWestvaco Corp. 122,668 Retail 10.45% 1,851,685 3,200 Bed Bath & Beyond, Inc.* 126,432 2,700 Gap, Inc. (The) 44,901 4,800 Genuine Parts Co. 153,456 4,995 Kohl's Corp.* 283,716 5,500 Lowe's Cos., Inc. 241,395 10,800 McDonald's Corp. 184,680 1,300 Safeway, Inc.* 21,606 2,600 Sears, Roebuck & Co. 73,684 1,300 Target Corp. 43,472 5,100 Walgreen Co. 157,386 7,850 Wal-Mart Stores, Inc. 520,957 Telecommunications 4.24% 751,715 5,500 Corning, Inc.* 29,810 13,100 Nokia Corp. (ADR) (Finland) 217,067 17,200 Nortel Networks Corp. (Canada)* 44,376 21,200 Qwest Communications International, Inc.* 79,924 6,900 SBC Communications, Inc. 161,184 11,300 Tellabs, Inc.* 69,834 4,000 Verizon Communications, Inc. 149,520 Tobacco 0.32% 56,906 1,850 Altria Group, Inc. 56,906 Transportation 2.40% 425,601 6,000 Burlington Northern Santa Fe Corp. 168,960 12,100 Norfolk Southern Corp. 256,641 Utilities 1.83% 323,210 5,400 American Electric Power Co., Inc. 142,452 1,100 Cinergy Corp. 37,554 1,800 Constellation Energy Group, Inc. 52,704 2,500 PPL Corp. 90,500 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 3.06% $542,000 (Cost $542,000) Joint Repurchase Agreement 3.06% Investment in a joint repurchase agreement transaction with State Street Bank & Trust Co. - -- Dated 04-30-03, due 05-01-03 (Secured by U.S. Treasury Inflation Indexed Bond 3.875% due 04-15-29, U.S. Treasury Inflation Indexed Notes 3.375% due 01-15-07 and 3.000% due 07-15-12) 1.280% $542 542,000 TOTAL INVESTMENTS 101.94% $18,058,703 OTHER ASSETS AND LIABILITIES, NET (1.94%) ($343,783) TOTAL NET ASSETS 100.00% $17,714,920
* Non-income-producing security. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. ASSETS AND LIABILITIES April 30, 2003 (unaudited) 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 $19,040,264) $18,058,703 Cash 1,745 Receivable for investments sold 161,812 Receivable for shares sold 982 Dividends and interest receivable 16,090 Other assets 20 Total assets 18,239,352 LIABILITIES Payable for investments purchased 432,244 Payable for shares repurchased 45,420 Payable to affiliates 24,717 Other payables and accrued expenses 22,051 Total liabilities 524,432 NET ASSETS Capital paid-in 23,950,399 Accumulated net realized loss on investments (5,231,588) Net unrealized depreciation of investments (981,561) Accumulated net investment loss (22,330) Net assets $17,714,920 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($5,466,638 [DIV] 697,414 shares) $7.84 Class B ($7,422,524 [DIV] 954,490 shares) $7.78 Class C ($4,825,758 [DIV] 620,513 shares) $7.78 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($7.84 [DIV] 95%) $8.25 Class C ($7.78 [DIV] 99%) $7.86 1 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. OPERATIONS For the period ended April 30, 2003 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in operat- ing the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Dividends (net of foreign withholding taxes of $872) $153,964 Interest 4,368 Total investment income 158,332 EXPENSES Investment management fee 77,289 Class A distribution and service fee 8,305 Class B distribution and service fee 38,321 Class C distribution and service fee 24,923 Transfer agent fee 49,984 Registration and filing fee 21,310 Custodian fee 13,858 Auditing fee 9,918 Printing 7,279 Accounting and legal services fee 2,431 Trustees' fee 873 Miscellaneous 685 Legal fees 120 Total expenses 255,296 Less expense reductions (74,634) Net expenses 180,662 Net investment loss (22,330) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on investments (1,128,732) Change in net unrealized appreciation (depreciation) of investments 1,388,045 Net realized and unrealized gain 259,313 Increase in net assets from operations $236,983 1 Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. CHANGES IN NET ASSETS This Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous period. The dif- ference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and any increase or decrease in money share- holders invested in the Fund. PERIOD PERIOD ENDED ENDED 10-31-02 1 4-30-03 2 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($68,104) ($22,330) Net realized loss (4,102,856) (1,128,732) Change in net unrealized appreciation (depreciation) (2,369,606) 1,388,045 Increase (decrease) in net assets resulting from operations (6,540,566) 236,983 From Fund share transactions 26,371,642 (2,353,139) NET ASSETS Beginning of period -- 19,831,076 End of period 3 $19,831,076 $17,714,920 1 Inception period 2-25-02 through 10-31-02. 2 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 3 Includes accumulated net investment loss of none and $22,330, respectively. See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS A SHARES The Financial Highlights show how the Fund's net asset value for a share has changed since the end of the previous period. PERIOD ENDED 10-31-02 1 4-30-03 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $7.67 Net investment income 3 -- 4 0.01 Net realized and unrealized gain (loss) on investments (2.33) 0.16 Total from investment operations (2.33) 0.17 Net asset value, end of period $7.67 $7.84 Total return 5,6 (%) (23.30)7 2.22 7 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $6 $5 Ratio of expenses to average net assets (%) 1.50 8 1.50 8 Ratio of adjusted expenses to average net assets 9 (%) 2.40 8 2.32 8 Ratio of net investment income to average net assets (%) -- 8 0.24 8 Portfolio turnover (%) 70 40
See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-02 1 4-30-03 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $7.64 Net investment loss 3 (0.04) (0.02) Net realized and unrealized gain (loss) on investments (2.32) 0.16 Total from investment operations (2.36) 0.14 Net asset value, end of period $7.64 $7.78 Total return 5,6 (%) (23.60)7 1.83 7 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $8 $7 Ratio of expenses to average net assets (%) 2.20 8 2.20 8 Ratio of adjusted expenses to average net assets 9 (%) 3.10 8 3.02 8 Ratio of net investment loss to average net assets (%) (0.69)8 (0.45)8 Portfolio turnover (%) 70 40
See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-02 1 4-30-03 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $7.64 Net investment loss 3 (0.04) (0.02) Net realized and unrealized gain (loss) on investments (2.32) 0.16 Total from investment operations (2.36) 0.14 Net asset value, end of period $7.64 $7.78 Total return 5,6 (%) (23.60)7 1.83 7 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $6 $5 Ratio of expenses to average net assets (%) 2.20 8 2.20 8 Ratio of adjusted expenses to average net assets 9 (%) 3.10 8 3.02 8 Ratio of net investment loss to average net assets (%) (0.69)8 (0.46)8 Portfolio turnover (%) 70 40 1 Class A, Class B, and Class C shares began operations on 2-25-02. 2 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 3 Based on the average of the shares outstanding. 4 Less than $0.01 per share. 5 Assumes dividend reinvestment and does not reflect the effect of sales charges. 6 Total returns would have been lower had certain expenses not been reduced during the periods shown. 7 Not annualized. 8 Annualized. 9 Does not take into consideration expense reductions during the periods shown.
See notes to financial statements. NOTES TO STATEMENTS (Unaudited) NOTE A Accounting policies John Hancock Large Cap Spectrum Fund (the "Fund") is a non-diversified series of John Hancock Equity 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 Fund's assets will be allocated among three investment styles: growth, core and value. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate with other funds managed by the Adviser in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund, based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2003. 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 $4,063,884 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The entire amount of the loss carryforward expires October 31, 2010. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. 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 at an annual rate of 0.85% of the Fund's average daily net asset value. The Adviser has a subadvisory agreement with Alliance Capital Management LP. The Fund is not responsible for payment of the subadvisory fees. The Adviser has agreed to limit the Fund's expenses, excluding distribution and service fees, to 1.20% of the Fund's average daily net assets, at least until February 28, 2004. Accordingly, the expense reduction amounted to $74,634 for the period ended April 30, 2003. The Adviser reserves the right to terminate this limitation in the future. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $12,942 with regard to sales of Class A shares. Of this amount, $1,876 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $9,179 was paid as sales commissions to unrelated broker-dealers and $1,887 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $3,802 with regard to sales of Class C shares. Of this amount, $3,776 was paid as sales commissions to unrelated broker-dealers and $26 was paid as sales commissions to sales personnel of Signator Investors. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, CDSCs received by JH Funds amounted to $21,517 for Class B shares and $2,525 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average net assets of the Fund. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investments as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. NOTE C Fund share transactions This listing illustrates the number of Fund shares sold and repurchased during the last two periods, along with the corresponding dollar value. The Fund has an unlimited number of shares authorized with no par value.
PERIOD ENDED 10-31-02 1 PERIOD ENDED 4-30-03 2 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 1,065,563 $10,469,656 88,621 $676,568 Repurchased (278,331) (2,309,288) (178,439) (1,344,146) Net increase (decrease) 787,232 $8,160,368 (89,818) ($667,578) CLASS B SHARES Sold 1,455,953 $14,180,950 95,719 $723,843 Repurchased (373,460) (3,099,618) (223,722) (1,656,506) Net increase (decrease) 1,082,493 $11,081,332 (128,003) ($932,663) CLASS C SHARES Sold 885,678 $8,455,714 55,398 $425,246 Repurchased (162,390) (1,325,772) (158,173) (1,178,144) Net increase (decrease) 723,288 $7,129,942 (102,775) ($752,898) NET INCREASE (DECREASE) 2,593,013 $26,371,642 (320,596) ($2,353,139) 1 Inception period from 2-25-02 through 10-31-02. 2 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $7,067,421 and $8,633,226, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $19,079,236. Gross unrealized appreciation and depreciation of investments aggregated $716,176 and $1,736,709, respectively, resulting in net unrealized depreciation of $1,020,533. The difference between book basis and tax basis net unrealized depreciation of investments is attributable primarily to the tax deferral of losses on wash sales. OUR FAMILY OF FUNDS - ----------------------------------------------------------------- Equity Balanced Fund Classic Value Fund Core Equity Fund Focused Equity Fund Growth Trends Fund Large Cap Equity Fund Large Cap Growth Fund Large Cap Spectrum Fund Mid Cap Growth Fund Multi Cap Growth Fund Small Cap Equity Fund Small Cap Growth Fund Sovereign Investors Fund U.S. Global Leaders Growth Fund - ----------------------------------------------------------------- Sector Biotechnology Fund Financial Industries Fund Health Sciences Fund Real Estate Fund Regional Bank Fund Technology Fund - ----------------------------------------------------------------- Income Bond Fund Government Income Fund High Income Fund High Yield Bond Fund Investment Grade Bond Fund Strategic Income Fund - ----------------------------------------------------------------- International International Fund Pacific Basin Equities 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. ELECTRONIC DELIVERY Now available from John Hancock Funds Instead of receiving 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 FOR YOUR INFORMATION TRUSTEES Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt *Members of the Audit Committee OFFICERS Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 SUBADVISER Alliance Capital Management, L.P. 1345 Avenue of the Americas New York, New York 10105 PRINCIPAL DISTRIBUTOR John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By express mail John Hancock Signature Services, Inc. Attn: Mutual Fund Image Operations 529 Main Street Charlestown, MA 02129 Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhancock.com/funds/edelivery This report is for the information of the shareholders of the John Hancock Large Cap Spectrum Fund. 670SA 4/03 6/03 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. By: ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Date: June 24, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Date: June 24, 2003 By: ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Date: June 24, 2003 EX-99.CERT 3 certification.txt CERTIFICATION CERTIFICATION I, Maureen R. Ford, certify that 1. I have reviewed this report on Form N-CSR of the John Hancock Equity Trust (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of trustees: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: _____________ _________________________ Maureen R. Ford Chairman, President and Chief Executive Officer CERTIFICATION I, Richard A. Brown, certify that 1. I have reviewed this report on Form N-CSR of the John Hancock Equity Trust (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of trustees: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: _____________ _________________________ Richard A. Brown Senior Vice President and Chief Financial Officer EX-99.CERT 4 certification906.txt CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the attached Report of John Hancock Equity Trust (the "registrant") on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the registrant does hereby certify that, to the best of such officer's knowledge: 1. The Report fully complies with the requirements of 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant as of, and for, the periods presented in the Report. - ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Dated: June 25, 2003 - ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Dated: June 25, 2003 A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----