N-CSR 1 et1.txt JOHN HANCOCK EQUITY TRUST UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4079 John Hancock Equity Trust (Exact name of registrant as specified in charter) 101 Huntington Avenue, Boston, Massachusetts 02199 (Address of principal executive offices) (Zip code) Alfred P. Ouellette Senior Attorney and Assistant Secretary 101 Huntington Avenue Boston, Massachusetts 02199 (Name and address of agent for service) Registrant's telephone number, including area code: 617-375-1513 Date of fiscal year end: October 31 Date of reporting period: April 30, 2005 ITEM 1. REPORT TO SHAREHOLDERS. JOHN HANCOCK Growth Trends Fund 4.30.2005 Semiannual Report [A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower, center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."] [A photo of James A. Shepherdson, Chief Executive Officer, flush left next to first paragraph.] CEO CORNER 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 Your expenses page 8 Fund's investments page 10 Financial statements page 15 For more information page 29 Dear Fellow Shareholders, After advancing for a second straight year in 2004, the stock market pulled back in the first four months of 2005. For much of 2004 the market had been in the doldrums as investors fretted about rising oil prices, higher interest rates, the war in Iraq and a closely contested presidential race. But the year ended on a high note with a sharp rally sparked by a definitive end to the U.S. presidential election and moderating oil prices. Investors were brought back down to earth in January, however, as the market declined in three of the four weeks and produced negative results for the month in a broad-based move downward. Rising oil prices and interest rates, and concerns about less robust corporate earnings growth were among the culprits that kept investors on the sidelines. Investors began to re-enter the market in February, reversing January's decline. But as the month progressed into March and April investors again grew concerned about further spikes in oil prices and rising interest rates. As a result, the first four months of 2005 ended with the major indexes in the red. By the end of April, the Dow Jones Industrial Average had returned -4.81%, the S&P 500 Index returned -4.00%, while the Nasdaq Composite Index fell by 11.67%. Bonds performed slightly better, managing to produce positive results, with the Lehman Brothers Aggregate Bond Index returning 0.87%. In October, you may recall we requested your vote on a proposal regarding the election of your fund's Board of Trustees. We are pleased to report that shareholders overwhelmingly approved the proposal, which became effective January 1, 2005. As a result, all open-end John Hancock funds now have the same Board of Trustees, comprised of ten members -- nine of them, including the Chairman, are independent Trustees with no direct or indirect interest in John Hancock Advisers, LLC, your fund's investment adviser. We believe this move is a way to improve the effectiveness of the Trustees' oversight of the funds, and we are grateful for your support. Sincerely, /S/ James A. Shepherdson James A. Shepherdson, Chief Executive Officer This commentary reflects the CEO's views as of April 30, 2005. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term growth of capital by investing approximately one third of its assets in equity securities of U.S. and foreign companies in each of the following sectors: financial services, health care and technology. Over the last six months * The stock market produced modest results, as rising interest rates and surging oil prices took the wind out of the market's sails in the first four months of 2005. * Of the Fund's three sectors, health care fared the best, outperforming the market, while financials were flat and technology was negative. * Because of the Fund's mandate regarding sectors, it was unable to participate in the good results in the industrial and energy sectors. [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, 2005." The chart is scaled in increments of 1% with -1% at the bottom and 1% at the top. The first bar represents the -0.18% total return for Class A. The second bar represents the -0.54% total return for Class B. The third bar represents the -0.54% 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. These returns do not reflect the deduction of the maximum sales charge, which would reduce the performance shown above."] Top holdings
Financial Services Health Care Technology 8.9% State Street Corp. 6.2% Celgene 18.2% Microsoft 8.4% American Express Co. 5.3% Abbott Laboratories 11.0% IBM 7.7% Citigroup 5.0% Gilead Sciences 9.5% Cisco Systems 7.3% Goldman Sachs 4.5% Shire Pharmaceuticals 7.1% Intel 6.7% Wells Fargo 4.3% Medtronic 5.8% Applied Materials
As a percentage of Financial Services, Health Care and Technology net assets, respectively, on 4-30-05. 1 MANAGERS' REPORT JOHN HANCOCK Growth Trends Fund Stocks turned in only modestly positive results during the six month period that ended April 30, 2005. The market posted a strong rally in the first two months of the period, fueled by solid economic growth and low inflation. But from January 2005 through the end of April, stocks declined in response to concerns about potentially slowing economic conditions, higher inflation and the skyrocketing price of oil. Against that backdrop, John Hancock Growth Trends Fund's Class A, Class B and Class C shares posted total returns of -0.18%, -0.54% and -0.54%, respectively, at net asset value. That compared with the 3.00% return of the average multi-cap core fund, according to Lipper, Inc.1 The Fund lagged its Lipper peer group average because our mandate to invest one third of the Fund's assets in each of three sectors -- health care, technology and financials -- prevented us from participating in the stronger-performing energy sector and naturally positioned us to more fully feel the effects of the lagging technology sector. "Financial stocks were essentially flat during the period, lagging the overall market primarily due to the rising interest rate environment..." FINANCIALS By James K. Schmidt, CFA Financial stocks were essentially flat during the period, lagging the overall market primarily due to the rising interest rate environment and by a flattening yield curve, as short-term rates rose faster than those at the longer end. Worries about a squeeze on mortgage companies' and banks' net interest margins put downward pressure on their stocks. Investment banks and other market- sensitive companies fared better with the market's late-year rally in 2004 and heightened underwriting and merger and acquisition activity. That boosted the stocks of Goldman Sachs and Lehman Brothers -- two of our better performers. Life and health insurance companies also turned in solid results because they were viewed as safe havens and had no taint of scandal. 2 This period was unusual in that it was characterized by a wide divergence in financial stocks' performance and significant underperformance from some individual companies. Names in this category were the financial portfolio's and the Fund's worst performers, including American International Group, which had numerous accounting issues at the same time it was named in a bid-rigging investigation launched by New York Attorney General Eliot Spitzer. Another was Fannie Mae, which continued to deal with accounting issues. Other detractors had earnings disappointments or lowered guidance on future earnings. This group included Fund holdings Ambac, MBNA, Bank of New York, Fifth Third Bancorp. and JPMorgan Chase. During the period we reduced our stake in bank stocks on the belief that their valuations were stretched, and this underweighting served us well, as banks were hit by the higher rates and flat yield curve plus a near dry-up in mergers. We also increased our exposure to the market-sensitive investment bankers and asset managers, which turned in strong results. We remain optimistic about the prospects for financial stocks. Despite a difficult time recently, fundamentals remain sound and the trend of consolidation of U.S. banks remains intact. We continue to favor the larger-cap names as their valuations are more attractive after lagging the small caps for several years. HEALTH CARE By Robert C. Junkin, CPA In April 2005, Robert Junkin, a vice president and portfolio manager of John Hancock Advisers, assumed portfolio management responsibility for the health care portfolio, replacing Linda Miller. Mr. Junkin also manages John Hancock Health Sciences Fund and John Hancock Large Cap Equity Fund. "Despite some regulatory and legal headwinds, health care stocks out paced the broader stock market..." Despite some regulatory and legal headwinds, health care stocks outpaced the broader stock market during the period. Some of our biotech holdings turned out to be some of the best performers in the health care portion of the Fund. A good example was Genentech, which reported strong profit and revenue growth, as sales of its new cancer drug Avastin continued to expand. Celegene's stock price rose 3 in response to strong sales of its drug Thalomid, which is approved to treat leprosy, but is most often used as a cancer treatment. Hospital operator Triad Hospitals scored well as it continued to produce strong revenue and earnings growth. Managed care company WellPoint Inc. also did well, benefiting from rising earnings generated partly by higher health-care premium hikes they passed onto their customers amid moderating medical cost trends. [Table at top left-hand side of page entitled "Sector distribution 2." The first listing is Financials - 31%, the second is Health care - 38% and the third is Information technology - 29%.] Among our worst performers were other biotech companies, including Biogen Idec, which suffered losses in response to news that the company was suspending sales of its multiple sclerosis treatment. Boston Scientific also disappointed, primarily due to concerns that it could lose sales of its cardiovascular stent to rival Johnson & Johnson. In our view, health care stocks may continue to be subject to the risks of increased regulatory and legal scrutiny throughout 2005; however, we remain quite optimistic about them over the long term because we believe that demographics and product innovation continue to be favorable to the industry. [Pie chart at just below middle of page with heading "Portfolio allocation 2." The chart is divided into two sections (from top to right): Common stocks 98% and Short-term investments & other 2%. ] TECHNOLOGY By Anurag Pandit, CFA After soaring in the final two months of 2004, technology stocks suffered steep declines in the first four months of 2005, resulting in disappointing returns for the sector during the period. Our focus on large-cap stocks toward the end of the period provided some protection in a tough market for tech stocks. While large-cap tech stocks have done relatively well recently, they were among the sector's laggards in the final two months of 2004 when smaller cap and speculative tech issues posted their strongest gains for the period. 4 [Table at top of page entitled "Scorecard." The header for the left column is "Investment" and the header for the right column is "Period's performance...and what's behind the numbers." The first listing is Goldman Sachs followed by an up arrow with the phrase "Strong merger and acquisition activity." The second listing is Genentech followed by an up arrow with the phrase "Investors cheer positive news on company's cancer drugs." The third listing is IBM followed by a down arrow with the phrase "Earnings disappointment prompts stock sell-off."] Throughout the period, we continued to emphasize segments of the tech sector that stood to gain the most from a rebound in corporate spending on technology. As a result, we focused on software companies, which posted good results during the period. For example, our best performer was Digital Insight, which makes software for the expanding business of Internet banking. Another winner was software company Macromedia, which performed well in response to stronger orders for its software for mobile devices, which convinced investors that the company had strong growth prospects over the next several years. In contrast, IBM disappointed due to lower-than-expected earnings. The stock price of Macrovision, maker of piracy protection software, also declined because investors feared its anticipated growth rate would not be realized in the near term. "After soaring in the final two months of 2004, technology stocks suffered steep declines in the first four months of 2005..." Overall, we believe that the outlook for tech stocks over the next year or so is neutral. We see no "killer application" on the near-term horizon that will substantially boost corporate and consumer tech spending. That said, there are a number of subsectors within technology that we believe continue to offer good prospects for growth, and we will continue to emphasize those. This commentary reflects the views of the 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. 2 As a percentage of net assets on 4-30-05. 5 A LOOK AT PERFORMANCE For the period ended April 30, 2005 Class A Class B Class C Inception date 9-22-00 9-22-00 9-22-00 Average annual returns with maximum sales charge (POP) One year -5.35% -6.03% -2.07% Since inception -12.59 -12.63 -12.25 Cumulative total returns with maximum sales charge (POP) Six months -5.19 -5.52 -1.54 One year -5.35 -6.03 -2.07 Since inception -46.16 -46.30 -45.20 Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The returns for Class C shares have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. 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 returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the Fund's current performance may be higher or lower than the performance shown. For performance data current to the most recent month-end, please call 1-800-225-5291 or visit the Fund's Web site at www.jhfunds.com. 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. 6 GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the 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 Standard & Poor's 500 Index and is equal to $8,596 as of April 30, 2005. 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 $5,670 as of April 30, 2005. 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 $5,384 as of April 30, 2005.] Class B Class C 1 Period beginning 9-22-00 9-22-00 Without sales charge $5,480 $5,480 With maximum sales charge 5,370 5,480 Index 8,596 8,596 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, 2005. The Class C shares investment with maximum sales charge has been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. Standard & Poor's 500 Index is an unmanaged index that includes 500 widely traded common stocks. It is not possible to invest directly in an index. Index figures do not reflect sales charges and would be lower if they did. 1 No contingent deferred sales charge applicable. 7 YOUR EXPENSES These examples are intended to help you understand your ongoing operating expenses. Understanding fund expenses As a shareholder of the Fund, you incur two types of costs: * Transaction costs which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc. * Ongoing operating expenses including management fees, distribution and service fees (if applicable) and other fund expenses. We are going to present only your ongoing operating expenses here. Actual expenses/actual returns This example is intended to provide information about your fund's actual ongoing operating expenses, and is based on your fund's actual return. It assumes an account value of $1,000.00 on October 31, 2004, with the same investment held until April 30, 2005. Account value Expenses paid $1,000.00 Ending value during period on 10-31-04 on 4-30-05 ended 4-30-05 1 Class A $998.20 $8.17 Class B 994.60 11.62 Class C 994.60 11.62 Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at April 30, 2005 by $1,000.00, then multiply it by the "expenses paid" for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows: Example -- -- -- -- | My account value / | | "expenses paid" | My | / $1,000.00 = 8.6 | X $| | = actual | $8,600.00 / | | from table | expenses -- -- -- -- 8 Hypothetical example for comparison purposes This table allows you to compare your fund's ongoing operating expenses with those of any other fund. It provides an example of the Fund's hypothetical account values and hypothetical expenses based on each class's actual expense ratio and an assumed 5% annual return before expenses (which is not your fund's actual return). It assumes an account value of $1,000.00 on October 31, 2004, with the same investment held until April 30, 2005. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses. Account value Expenses paid $1,000.00 Ending value during period on 10-31-04 on 4-30-05 ended 4-30-05 1 Class A $1,016.61 $8.25 Class B 1,013.14 11.73 Class C 1,013.14 11.73 Remember, these examples do not include any transaction costs, such as sales charges; therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectus for details regarding transaction costs. 1 Expenses are equal to the Fund's annualized expense ratio of 1.65%, 2.35% and 2.35% for Class A, Class B and Class C, respectively, multiplied by the average account value over the period, multiplied by number of days in most recent fiscal half-year/365 or 366 (to reflect the one-half year period). 9 FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2005 (unaudited) This schedule is divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's cash position, are listed last.
Issuer Shares Value Common stocks 97.71% $138,384,643 (Cost $125,015,842) Application Software 2.03% 2,878,206 Cadence Design Systems, Inc. (I)(L) 112,600 1,576,400 Hyperion Solutions Corp. (I)(L) 16,650 677,156 Intuit, Inc. (I) 15,500 624,650 Asset Management & Custody Banks 6.43% 9,102,543 Bank of New York Co., Inc. (The) 100,000 2,794,000 Franklin Resources, Inc. 8,000 549,440 Legg Mason, Inc. 15,550 1,101,873 Northern Trust Corp. 10,000 450,300 State Street Corp. 91,000 4,206,930 Biotechnology 11.05% 15,653,087 Abgenix, Inc. (I) 150,000 1,045,500 Amgen, Inc. (I) 34,700 2,019,887 Celgene Corp. (I) 90,000 3,411,900 Charles River Laboratories International, Inc. (I) 40,000 1,894,800 Genentech, Inc. (I) 25,000 1,773,500 Gilead Sciences, Inc. (I) 75,000 2,782,500 Lexicon Genetics, Inc. (I) 94,000 411,720 Neurocrine Biosciences, Inc. (I) 43,000 1,503,280 Telik, Inc. (I) 50,000 810,000 Communications Equipment 5.91% 8,365,196 Cisco Systems, Inc. (I) 215,450 3,722,976 Motorola, Inc. 92,659 1,421,389 QUALCOMM, Inc. 42,150 1,470,614 Tekelec (I) 76,300 1,038,443 VeriSign, Inc. (I)(L) 26,900 711,774 See notes to financial statements. 10 FINANCIAL STATEMENTS Issuer Shares Value Computer Hardware 3.81% $5,397,983 Hewlett-Packard Co. 52,715 1,079,076 International Business Machines Corp. 56,545 4,318,907 Computer Storage & Peripherals 2.02% 2,861,894 EMC Corp. (I) 132,336 1,736,248 Lexmark International, Inc. (Class A) (I) 16,208 1,125,646 Consumer Finance 3.01% 4,265,225 American Express Co. 75,500 3,978,850 MBNA Corp. 14,500 286,375 Data Processing & Outsourced Services 1.05% 1,487,560 eFunds Corp. (I) 10,900 238,274 First Data Corp. 32,850 1,249,286 Diversified Banks 6.44% 9,127,483 Bank of America Corp. 63,212 2,847,068 Wachovia Corp. 60,875 3,115,583 Wells Fargo & Co. 52,800 3,164,832 Diversified Financial Services 3.80% 5,381,448 Citigroup, Inc. 77,150 3,622,964 JPMorgan Chase & Co. 34,000 1,206,660 National Financial Partners Corp. 2,910 111,278 Wright Express Corp. (I) 26,380 440,546 Health Care Equipment 8.24% 11,676,632 Biomet, Inc. 17,500 677,075 Boston Scientific Corp. (I) 55,000 1,626,900 Hospira, Inc. (I) 55,600 1,865,380 Integra LifeSciences Holdings (I) 25,000 885,750 Kinetic Concepts, Inc. (I) 30,000 1,843,500 Medtronic, Inc. 45,000 2,371,500 Stryker Corp. 11,000 534,050 Varian Medical Systems, Inc. (I) 45,000 1,518,300 Zimmer Holdings, Inc. (I) 4,350 354,177 Health Care Facilities 2.09% 2,961,000 Manor Care, Inc. (I) 35,000 1,167,250 Triad Hospitals, Inc. (I) 35,000 1,793,750 Health Care Services 2.40% 3,396,750 Caremark Rx, Inc. (I) 35,000 1,401,750 WebMD Corp. (I) 210,000 1,995,000 See notes to financial statements. 11 FINANCIAL STATEMENTS Issuer Shares Value Health Care Supplies 0.88% $1,241,600 Alcon, Inc. (Switzerland) 12,800 1,241,600 Insurance Brokers 0.50% 702,450 Willis Group Holdings Ltd. (Bermuda) 21,000 702,450 Internet Software & Services 1.33% 1,878,616 Digital Insight Corp. (I) 89,050 1,787,233 Epicor Software Corp. (I) 8,300 91,383 Investment Banking & Brokerage 4.14% 5,857,975 Goldman Sachs Group, Inc. (The) 32,500 3,470,675 Lehman Brothers Holdings, Inc. 9,000 825,480 Merrill Lynch & Co., Inc. 13,300 717,269 Morgan Stanley 16,050 844,551 Life & Health Insurance 1.14% 1,609,540 AFLAC, Inc. 8,300 337,395 Conseco, Inc. (I) 29,480 567,195 Genworth Financial, Inc. 3,800 106,210 Scottish Re Group Ltd. (Cayman Islands) 25,500 598,740 Managed Health Care 2.62% 3,713,928 Aetna, Inc. 16,000 1,173,920 PacifiCare Health Systems, Inc. (I) 8,300 496,008 WellPoint, Inc. (I) 16,000 2,044,000 Multi-Line Insurance 3.65% 5,165,244 American International Group, Inc. 55,900 2,842,515 Assurant, Inc. 3,250 107,542 Hartford Financial Services Group, Inc. (The) 6,450 466,787 PartnerRe Ltd. (Bermuda) 30,000 1,748,400 Pharmaceuticals 10.30% 14,586,983 Abbot Laboratories 60,000 2,949,600 Cubist Pharmaceuticals, Inc. (I) 125,000 1,131,250 Cypress Bioscience, Inc. (I) 37,085 381,975 IVAX Corp. (I) 44,100 833,490 Johnson & Johnson 25,000 1,715,750 MGI Pharma, Inc. (I) 23,000 507,150 Pfizer, Inc. 60,000 1,630,200 Rigel Pharmaceuticals, Inc. (I) 80,000 1,372,000 Roche Holding AG (Switzerland) 13,000 1,579,168 Shire Pharmaceuticals Group Plc, American Depositary Receipt (ADR) (United Kingdom) 80,000 2,486,400 See notes to financial statements. 12 FINANCIAL STATEMENTS Issuer Shares Value Property & Casualty Insurance 0.30% $424,497 Ambac Financial Group, Inc. 6,350 424,497 Regional Banks 1.17% 1,664,700 Fifth Third Bancorp. 24,000 1,044,000 M&T Bank Corp. 6,000 620,700 Reinsurance 0.35% 490,232 RenaissanceRe Holdings Ltd. (Bermuda) 10,950 490,232 Semiconductor Equipment 2.11% 2,992,150 Applied Materials, Inc. (L) 153,200 2,278,084 KLA-Tencor Corp. (I)(L) 18,300 714,066 Semiconductors 4.09% 5,794,333 Intel Corp. (L) 117,800 2,770,656 Power Integrations, Inc. (I) 35,800 778,650 Texas Instruments, Inc. (L) 89,945 2,245,027 Specialized Finance 0.21% 302,100 CIT Group, Inc. 7,500 302,100 Systems Software 6.43% 9,108,563 Macrovision Corp. (I) 96,650 1,976,493 Microsoft Corp. 281,900 7,132,070 Thrifts & Mortgage Finance 0.21% 296,725 Fannie Mae 5,500 296,725 Interest Par value Issuer, description, maturity date rate (000) Value Short-term investments 8.90% $12,606,008 (Cost $12,606,008) Joint Repurchase Agreement 2.77% 3,921,000 Investment in a joint repurchase agreement transaction with Bank of America Corp. -- Dated 4-29-05 due 5-2-05 (secured by U.S. Treasury STRIPS due 11-15-10 thru 8-15-25) 2.85% $3,921 3,921,000 Shares Cash Equivalents 6.13% 8,685,008 AIM Cash Investment Trust (T) 8,685,008 8,685,008 See notes to financial statements. 13 Total investments 106.61% $150,990,651 Other assets and liabilities, net (6.61%) ($9,366,061) Total net assets 100.00% $141,624,590
(I) Non-income-producing security. (L) All or a portion of this security is on loan as of April 30, 2005. (T) Represents investment of securities lending collateral. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. 14 FINANCIAL STATEMENTS ASSETS AND LIABILITIES April 30, 2005 (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 $137,621,850) including $8,514,978 of securities loaned $150,990,651 Receivable for investments sold 150,516 Receivable for shares sold 33,861 Dividends and interest receivable 116,826 Other assets 10,840 Total assets 151,302,694 Liabilities Due to custodian 292,804 Payable for investments purchased 28,813 Payable for shares repurchased 442,842 Payable upon return of securities loaned 8,685,008 Payable to affiliates Management fees 88,459 Distribution and service fees 11,585 Other 60,861 Other payables and accrued expenses 67,732 Total liabilities 9,678,104 Net assets Capital paid-in 343,616,531 Accumulated net realized loss on investments and foreign currency transactions (215,440,745) Net unrealized appreciation of investments and translation of assets and liabilities in foreign currencies 13,369,598 Accumulated net investment income 79,206 Net assets $141,624,590 Net asset value per share Based on net asset values and shares outstanding -- the Fund has an unlimited number of shares authorized with no par value Class A ($48,249,140 [DIV] 8,525,836 shares) $5.66 Class B ($69,330,797 [DIV] 12,646,825 shares) $5.48 Class C ($24,044,653 [DIV] 4,386,071 shares) $5.48 Maximum offering price per share Class A 1 ($5.66 [DIV] 95%) $5.96 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. 15 FINANCIAL STATEMENTS OPERATIONS For the period ended April 30, 2005 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated. Investment income Dividends (net of foreign withholding taxes of $3,056) $1,719,856 Interest 60,653 Securities lending 9,260 Total investment income 1,789,769 Expenses Investment management fees 807,341 Class A distribution and service fees 81,242 Class B distribution and service fees 395,691 Class C distribution and service fees 140,843 Transfer agent fees 359,940 Printing 43,558 Custodian fees 42,431 Miscellaneous 22,608 Registration and filing fees 17,882 Accounting and legal services fees 16,038 Professional fees 13,052 Interest 7,846 Trustees' fees 2,690 Securities lending fees 444 Total expenses 1,951,606 Less expense reductions (243,919) Net expenses 1,707,687 Net investment income 82,082 Realized and unrealized gain (loss) Net realized gain (loss) on Investments 7,840,278 Foreign currency transactions (458) Change in net unrealized appreciation (depreciation) of Investments (7,481,156) Translation of assets and liabilities in foreign currencies (540) Net realized and unrealized gain 358,124 Increase in net assets from operations $440,206 1 Semiannual period from 11-1-04 through 4-30-05. See notes to financial statements. 16 FINANCIAL STATEMENTS CHANGES IN NET ASSETS These Statements of Changes in Net Assets show how the value of the Fund's net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of Fund share transactions. Year Period ended ended 10-31-04 4-30-05 1 Increase (decrease) in net assets From operations Net investment income (loss) ($2,179,314) $82,082 Net realized gain 1,013,874 7,839,820 Change in net unrealized appreciation (depreciation) 6,287,307 (7,481,696) Increase in net assets resulting from operations 5,121,867 440,206 From Fund share transactions (44,394,938) (32,807,094) Net assets Beginning of period 213,264,549 173,991,478 End of period 2 $173,991,478 $141,624,590 1 Semiannual period from 11-1-04 through 4-30-05. Unaudited. 2 Includes accumulated net investment income (loss) of ($2,876) and $79,206, respectively. See notes to financial statements. 17 FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a share has changed since the end of the previous period. Period ended 10-31-00 1 10-31-01 10-31-02 10-31-03 10-31-04 4-30-05 2 Per share operating performance Net asset value, beginning of period $10.00 $9.54 $5.87 $4.49 $5.51 $5.67 Net investment income (loss) 3 0.01 (0.05) (0.05) (0.03) (0.04) 0.02 Net realized and unrealized gain (loss) on investments (0.47) (3.61) (1.33) 1.05 0.20 (0.03) Total from investment operations (0.46) (3.66) (1.38) 1.02 0.16 (0.01) Less distributions From net investment income -- (0.01) -- -- -- -- Net asset value, end of period $9.54 $5.87 $4.49 $5.51 $5.67 $5.66 Total return 4,5 (%) (4.60) 6 (38.37) (23.51) 22.72 2.90 (0.18) 6 Ratios and supplemental data Net assets, end of period (in millions) $86 $99 $65 $69 $58 $48 Ratio of expenses to average net assets (%) 1.65 7 1.65 1.65 1.65 1.65 1.65 7 Ratio of adjusted expenses to average net assets 8 (%) 1.75 7 1.85 1.88 2.02 1.86 1.95 7 Ratio of net investment income (loss) to average net assets (%) 0.57 7 (0.70) (0.91) (0.64) (0.62) 0.55 7 Portfolio turnover (%) 11 116 68 76 40 18
See notes to financial statements. 18 FINANCIAL HIGHLIGHTS CLASS B SHARES
Period ended 10-31-00 1 10-31-01 10-31-02 10-31-03 10-31-04 4-30-05 2 Per share operating performance Net asset value, beginning of period $10.00 $9.54 $5.83 $4.42 $5.40 $5.51 Net investment loss 3 -- 9 (0.10) (0.09) (0.06) (0.07) -- 9 Net realized and unrealized gain (loss) on investments (0.46) (3.61) (1.32) 1.04 0.18 (0.03) Total from investment operations (0.46) (3.71) (1.41) 0.98 0.11 (0.03) Net asset value, end of period $9.54 $5.83 $4.42 $5.40 $5.51 $5.48 Total return 4,5 (%) (4.60) 6 (38.89) (24.19) 22.17 2.04 (0.54) 6 Ratios and supplemental data Net assets, end of period (in millions) $125 $161 $102 $104 $85 $69 Ratio of expenses to average net assets (%) 2.34 7 2.35 2.35 2.35 2.35 2.35 7 Ratio of adjusted expenses to average net assets 8 (%) 2.44 7 2.55 2.58 2.72 2.56 2.65 7 Ratio of net investment loss to average net assets (%) (0.13) 7 (1.40) (1.61) (1.34) (1.32) (0.13) 7 Portfolio turnover (%) 11 116 68 76 40 18
See notes to financial statements. 19 FINANCIAL HIGHLIGHTS CLASS C SHARES
Period ended 10-31-00 1 10-31-01 10-31-02 10-31-03 10-31-04 4-30-05 2 Per share operating performance Net asset value, beginning of period $10.00 $9.54 $5.83 $4.42 $5.40 $5.51 Net investment loss 3 -- 9 (0.10) (0.09) (0.06) (0.07) -- 9 Net realized and unrealized gain (loss) on investments (0.46) (3.61) (1.32) 1.04 0.18 (0.03) Total from investment operations (0.46) (3.71) (1.41) 0.98 0.11 (0.03) Net asset value, end of period $9.54 $5.83 $4.42 $5.40 $5.51 $5.48 Total return 4,5 (%) (4.60) 6 (38.89) (24.19) 22.17 2.04 (0.54) 6 Ratios and supplemental data Net assets, end of period (in millions) $53 $69 $42 $41 $31 $24 Ratio of expenses to average net assets (%) 2.34 7 2.35 2.35 2.35 2.35 2.35 7 Ratio of adjusted expenses to average net assets 8 (%) 2.44 7 2.55 2.58 2.72 2.56 2.65 7 Ratio of net investment loss to average net assets (%) (0.13) 7 (1.40) (1.61) (1.34) (1.32) (0.11) 7 Portfolio turnover (%) 11 116 68 76 40 18
1 Class A, Class B and Class C shares began operations on 9-22-00. 2 Semiannual period from 11-1-04 through 4-30-05. Unaudited. 3 Based on the average of the shares outstanding. 4 Assumes dividend reinvestment and does not reflect the effect of sales charges. 5 Total returns would have been lower had certain expenses not been reduced during the periods shown. 6 Not annualized. 7 Annualized. 8 Does not take into consideration expense reductions during the periods shown. 9 Less than $0.01 per share. See notes to financial statements. 20 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 the terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or, if quotations are not readily available, or the value has been materially affected by events occurring after the close of a foreign market, at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments which have a remaining maturity of 60 days or less may be 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 John Hancock Financial Services, Inc., may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement 21 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 4:00 P.M., London time, on the date of any determination of the net asset value of the Fund. Transactions affecting statement of operations accounts and net realized gain (loss) on investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign currency exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency exchange gains and losses arise from changes in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange rates. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Capital gains realized on some foreign securities are subject to foreign taxes, which are accrued as applicable. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net asset value of the respective classes. Distrib ution and service fees, if any, are calculated daily at the class level based on the appropriate net asset value of each class and the specific expense rate(s) applicable to each class. Expenses The majority of expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate, with other funds managed by the Adviser, in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit, and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2005. Securities lending The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially. On April 30, 2005, the Fund 22 loaned securities having a market value of $8,514,978 collateralized by cash in the amount of $8,685,008. The cash collateral was invested in a short-term instrument. Securities lending expenses are paid by the Fund to the Adviser. Forward foreign currency exchange contracts The Fund may enter into forward foreign currency exchange contracts as a hedge against the effect of fluctuations in currency exchange rates. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date at a set price. The aggregate principal amounts of the contracts are marked to market daily at the applicable foreign currency exchange rates. Any resulting unrealized gains and losses are included in the determination of the Fund's daily net asset value. The Fund records realized gains and losses at the time the forward foreign currency exchange contracts are closed out. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of the contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. These contracts involve market or credit risk in excess of the unrealized gain or loss reflected in the Fund's Statement of Assets and Liabilities. The Fund may also purchase and sell forward contracts to facilitate the settlement of foreign currency denominated portfolio transactions, under which it intends to take delivery of the foreign currency. Such contracts normally involve no market risk if they are offset by the currency amount of the underlying transactions. The Fund had no open forward foreign currency exchange contracts on April 30, 2005. 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 $222,780,511 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2009 -- $83,769,657, October 31, 2010 -- $87,616,374 and October 31, 2011 -- $51,394,480. 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, if any, on the ex-dividend date. Distri bu tions 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 23 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 agreed to limit the Fund's management fee to 0.75% of the Fund's average daily net assets, at least until February 28, 2006. Accordingly, the expense reductions related to management fee limitation amounted to $201,835 for the period ended April 30, 2005. The Adviser reserves the right to terminate this limitation in the future. The Adviser has agreed to limit the Fund's total expenses, excluding distribution and service fees, to 1.35% of the Fund's average daily net asset value, on an annual basis, at least until February 28, 2006. There were no expense reductions related to the total expense limitation for the period ended April 30, 2005. The Adviser reserves the right to terminate this limitation in the future. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net asset value and 1.00% of Class B and Class C average daily net asset value. A maximum of 0.25% of such payments may be service fees, as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A shares are assessed up-front sales charges. During the period ended April 30, 2005, JH Funds received net up-front sales charges of $35,720 with regard to sales of Class A shares. Of this amount, $5,219 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $24,523 was paid as sales commissions to unrelated broker-dealers and $5,978 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. 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, 2005, CDSCs received by JH Funds amounted to $243,518 for Class B shares and $1,089 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. ("Signature Services"), an indirect subsidiary of 24 JHLICo. For Class A, Class B and Class C shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.05% of each class's average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses aggregated and allocated to each class on the basis of its relative net asset value. Signature Services agreed to voluntarily reduce the Fund's asset-based portion of the transfer agent fee if the total transfer agent fee exceeds the Lipper, Inc. median transfer agency fee for comparable mutual funds by 0.05%. Accordingly, the transfer agent expense for Class A, Class B and Class C shares was reduced by $42,084 for the period ended April 30, 2005. Signature Services reserves the right to terminate this limitation at any time. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period amounted to $16,038. The Fund also paid the Adviser the amount of $119 for certain publishing services, included in the printing fees. Mr. James A. Shepherdson is a director and officer of the Adviser, as well as affiliated Trustee of the Fund, and is compensated by the Adviser. 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 Compen sa tion 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.
Year ended 10-31-04 Period ended 4-30-05 1 Shares Amount Shares Amount Class A shares Sold 1,425,444 $8,093,762 530,649 $3,088,934 Repurchased (3,710,781) (21,104,062) (2,187,910) (12,763,930) Net decrease (2,285,337) ($13,010,300) (1,657,261) ($9,674,996) Class B shares Sold 1,183,795 $6,544,677 267,701 $1,514,885 Repurchased (4,953,899) (27,393,331) (3,124,408) (17,703,299) Net decrease (3,770,104) ($20,848,654) (2,856,707) ($16,188,414) Class C shares Sold 425,690 $2,372,094 98,389 $557,247 Repurchased (2,324,764) (12,908,078) (1,323,072) (7,500,931) Net decrease (1,899,074) ($10,535,984) (1,224,683) ($6,943,684) Net decrease (7,954,515) ($44,394,938) (5,738,651) ($32,807,094)
1 Semiannual period from 11-1-04 through 4-30-05. Unaudited. 25 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, 2005, aggregated $27,606,256 and $58,640,652, respectively. The cost of investments owned on April 30, 2005, including short-term investments, for federal income tax purposes, was $138,121,904. Gross unrealized appreciation and depreciation of investments aggregated $20,513,538 and $7,644,791, respectively, resulting in net unrealized appreciation of $12,868,747. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses certain sales of securities. Note E Shareholder meeting On December 1, 2004, a Special Meeting of shareholders of the Fund was held to elect nine Trustees effective December 1, 2004. Proxies covering 29,005,568 shares of beneficial interest were voted at the meeting. The shareholders elected the following Trustees to serve until their respective successors are duly elected and qualified, with the votes tabulated as follows: WITHHELD FOR AUTHORITY ----------------------------------------------------------------- James F. Carlin 28,112,871 892,697 Richard P. Chapman, Jr. 28,106,008 899,560 William H. Cunningham 28,116,711 888,857 Ronald R. Dion 28,117,513 888,055 Charles L. Ladner 28,084,683 920,885 Dr. John A. Moore 28,111,292 894,276 Patti McGill Peterson 28,073,112 932,456 Steven R. Pruchansky 28,092,842 912,726 James A. Shepherdson 28,118,087 887,481 26 OUR FAMILY OF FUNDS ------------------------------------------------------- Equity Balanced Fund Classic Value Fund Core Equity Fund Focused Equity Fund Greater China Opportunities Fund Growth Trends Fund International Fund Large Cap Equity Fund Large Cap Select Fund Mid Cap Growth Fund Multi Cap Growth Fund Small Cap Fund Small Cap Equity Fund Small Cap Growth Fund Sovereign Investors Fund U.S. Global Leaders Growth Fund ------------------------------------------------------- Sector Financial Industries Fund Health Sciences Fund Real Estate Fund Regional Bank Fund Technology Fund ------------------------------------------------------- Income Bond Fund Government Income Fund High Income Fund High Yield Fund Investment Grade Bond Fund Strategic Income Fund ------------------------------------------------------- Tax-Free Income California Tax-Free Income Fund High Yield Municipal Bond Fund Massachusetts Tax-Free Income Fund New York Tax-Free Income Fund Tax-Free Bond Fund ------------------------------------------------------- Money Market Money Market Fund U.S. Government Cash Reserve A fund's investment objectives, risks, charges and expenses are included in the prospectus and should be considered carefully before investing. For a prospectus, call your financial professional, call John Hancock Funds at 1-800-225-5291 or visit our Web site at www.jhfunds.com. Please read the prospectus carefully before investing or sending money. 27 ELECTRONIC DELIVERY Now available from John Hancock Funds Instead of sending annual and semiannual reports and prospectuses through the U.S. mail, we'll notify you by e-mail when these documents are available for online viewing. How does electronic delivery benefit you? * No more waiting for the mail to arrive; you'll receive an e-mail notification as soon as the document is ready for online viewing. * Reduces the amount of paper mail you receive from John Hancock Funds. * Reduces costs associated with printing and mailing. Sign up for electronic delivery today at www.jhfunds.com/edelivery 28 For more information The Fund's proxy voting policies, procedures and records are available without charge, upon request: By phone On the Fund's Web site On the SEC's Web site 1-800-225-5291 www.jhfunds.com/proxy www.sec.gov Trustees Charles L. Ladner, Chairman* James F. Carlin Richard P. Chapman, Jr.* William H. Cunningham Ronald R. Dion Dr. John A. Moore* Patti McGill Peterson* Steven R. Pruchansky James A. Shepherdson Lt. Gen. Norman H. Smith, USMC (Ret.) *Members of the Audit Committee Officers James A. Shepherdson President and Chief Executive Officer William H. King Vice President and Treasurer Investment adviser John Hancock Advisers, LLC 101 Huntington Avenue Boston, MA 02199-7603 Principal distributor John Hancock Funds, LLC 101 Huntington Avenue Boston, MA 02199-7603 Custodian The Bank of New York One Wall Street New York, NY 10286 Transfer agent John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 Legal counsel Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, MA 02109-1803 The Fund's investment objective, risks, charges and expenses are included in the prospectus and should be considered carefully before investing. For a prospectus, call your financial professional, call John Hancock Funds at 1-800-225-5291, or visit the Fund's Web site at www.jhfunds.com. Please read the prospectus carefully before investing or sending money. How to contact us Internet www.jhfunds.com Mail Regular mail: Express mail: John Hancock John Hancock Signature Services, Inc. Signature Services, Inc. 1 John Hancock Way, Suite 1000 Mutual Fund Image Operations Boston, MA 02217-1000 529 Main Street Charlestown, MA 02129 Phone Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 A listing of month-end portfolio holdings is available on our Web site, www.jhfunds.com. A more detailed portfolio holdings summary is available on a quarterly basis 60 days after the fiscal quarter on our Web site or upon request by calling 1-800-225-5291, or on the Securities and Exchange Commission's Web site, www.sec.gov. 29 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhfunds.com/edelivery This report is for the information of the shareholders of John Hancock Growth Trends Fund. 460SA 4/05 6/05 JOHN HANCOCK Small Cap Fund 4.30.2005 Semiannual Report [A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower, center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."] [A photo of James A. Shepherdson, Chief Executive Officer, flush left next to first paragraph.] CEO CORNER 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 Your expenses page 8 Fund's investments page 10 Financial statements page 14 For more information page 29 Dear Fellow Shareholders, After advancing for a second straight year in 2004, the stock market pulled back in the first four months of 2005. For much of 2004 the market had been in the doldrums as investors fretted about rising oil prices, higher interest rates, the war in Iraq and a closely contested presidential race. But the year ended on a high note with a sharp rally sparked by a definitive end to the U.S. presidential election and moderating oil prices. Investors were brought back down to earth in January, however, as the market declined in three of the four weeks and produced negative results for the month in a broad-based move downward. Rising oil prices and interest rates, and concerns about less robust corporate earnings growth were among the culprits that kept investors on the sidelines. Investors began to re-enter the market in February, reversing January's decline. But as the month progressed into March and April investors again grew concerned about further spikes in oil prices and rising interest rates. As a result, the first four months of 2005 ended with the major indexes in the red. By the end of April, the Dow Jones Industrial Average had returned -4.81%, the S&P 500 Index returned -4.00%, while the Nasdaq Composite Index fell by 11.67%. Bonds performed slightly better, managing to produce positive results, with the Lehman Brothers Aggregate Bond Index returning 0.87%. In October, you may recall we requested your vote on a proposal regarding the election of your fund's Board of Trustees. We are pleased to report that shareholders overwhelmingly approved the proposal, which became effective January 1, 2005. As a result, all open-end John Hancock funds now have the same Board of Trustees, comprised of ten members -- nine of them, including the Chairman, are independent Trustees with no direct or indirect interest in John Hancock Advisers, LLC, your fund's investment adviser. We believe this move is a way to improve the effectiveness of the Trustees' oversight of the funds, and we are grateful for your support. Sincerely, /S/ James A. Shepherdson James A. Shepherdson, Chief Executive Officer This commentary reflects the CEO's views as of April 30, 2005. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks capital appreciation by normally invest ing at least 80% of its assets in equity securities of small- capitalization companies (compa- nies with market capitalizations under $2 billion). Over the last six months * The small-cap market's early gains were largely offset by falling share prices late in the period, as concerns about slowing economic growth and worsening inflation intensified. * The Federal Reserve Board hiked short-term interest rates by 0.25% four times, raising the target federal funds rate to 2.75%. * Strong stock picking in the health care sector enabled the Fund to finish ahead of its peer group average and the Russell 2000 Index, while slightly underperforming the S&P SmallCap 600 Index. [Bar chart with heading "John Hancock Small Cap Fund." Under the heading is a note that reads "Fund performance for the six months ended April 30, 2005." The chart is scaled in increments of 10% with -10% at the bottom and 10% at the top. The first bar represents the 2.26% total return for Class A. The second bar represents the -7.23%* total return for Class B. The third bar represents the -7.23%* total return for Class C. The fourth bar represents the -6.96%* total return for Class I. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested. These returns do not reflect the deduction of the maximum sales charge, which would reduce the performance shown above."] Top 10 holdings 3.8% Gaylord Entertainment Co. 3.7% Cantel Medical Corp. 3.4% Philadelphia Consolidated Holding Corp. 3.3% Hologic, Inc. 3.1% Playtex Products, Inc. 3.0% Placer Sierra Bancshares 2.9% Warnaco Group, Inc. (The) 2.4% Trimble Navigation Ltd. 2.4% Avocent Corp. 2.4% Scottish Re Group Ltd. As a percentage of net assets on April 30, 2005. 1 BY CHARLES S. GLOVSKY, CFA AND STEPHEN A. LANZENDORF, CFA MANAGERS' REPORT JOHN HANCOCK Small Cap Fund On December 3, 2004, Independence Small Cap Portfolio merged into John Hancock Small Cap Fund. Independence Investment LLC will continue to manage the Fund under a sub-advisory agreement. Small-cap stocks ended the period little changed from where they began it, as initial optimism about the economy, the conclusion of the presidential election and falling oil prices gave way to concerns about rising interest rates and a possible return of stagflation -- a condition marked by sluggish economic growth and high inflation. After rallying in November and December, the market's advance stalled in the first two months of 2005, and the final two months exhibited a clear downtrend, erasing most of the prior gains. "Small-cap stocks ended the period little changed from where they began it..." Heading the list of investors' worries was the price of crude oil, which touched a new high around $57 per barrel near the beginning of April. For its part, the Federal Reserve Board raised short-term interest rates four times, boosting the target federal funds rate to 2.75%. The Fed also indicated that more hikes were in the cards. Meanwhile, the Commerce Department's initial reading on first-quarter gross domestic product, a broad measure of the nation's economic activity, came in at an annual rate of 3.1%, down substantially from the previous quarter's 3.8% rate. Large-cap stocks outperformed small-caps, reversing the trend of small-cap outperformance in evidence for most of the past five years. As investors became increasingly concerned about a decelerating U.S. economy, they viewed the greater economic sensitivity of small caps as a liability. Moreover, after so many quarters of outperformance, small-cap valuations were no longer cheap. An additional headwind for the Fund was the underperformance of growth relative to value, which occurred across all capitalization groups. The growing consensus that the economy might slow further made defensive, value-oriented stocks more attractive to investors. 2 Looking at performance For the six months ended April 30, 2005, John Hancock Small Cap Fund's Class A shares returned 2.26% at net asset value. By comparison, the average small-cap core fund returned 1.87%, according to Lipper, Inc. 1 while the Russell 2000 Index finished with a -0.15% return and the Standard & Poor's SmallCap 600 Index returned 2.58%. From their inception on December 6, 2004 through April 30, 2005, the Fund's Class B, Class C and Class I shares posted total returns of -7.23%, -7.23% and -6.96%, respectively, at net asset value. Keep in mind that your returns will differ from those listed above if you were not invested in the Fund for the entire period or did not reinvest all distributions. Historical performance information can be found on pages six and seven. [Photos of Charles Glovsky and Stephen Lanzendorf, flush right next to first paragraph.] Strategy explained As is typical for the Fund, stock selection, not sector weightings, was the primary determinant of relative performance. While we pay attention to sector weightings, we won't buy a stock unless it passes our quantitative and fundamentals screens, and meets our requirement of buying only undervalued stocks of companies with improving fundamentals. We thoroughly research each stock that passes our rigorous screening process, paying particular attention to independent, non-management sources of information, such as customers, suppliers, trade representatives and competitors. Especially in the small-cap arena, where analyst coverage of most stocks is less thorough than in the large-cap universe, diligent research can pay off in the discovery of attractive bargains. "Health care provided the largest boost to relative performance..." Health care adds value Health care provided the largest boost to relative performance, in large part due to strong gains by Cantel Medical Corp. and Hologic, Inc. The former, a provider of a diverse line of medical equipment and supplies, almost doubled during the period, as the company made an important acquisition and reported better-than-expected earnings for its fiscal second quarter ending January 31, 2005. Similarly, Hologic, a maker of diagnostic and digital imaging systems for medical applications, bettered earnings estimates for its fiscal second 3 quarter ending March 31, 2005. Robust sales of the company's Selenia digital mammography system and its bone densitometry equipment drove Hologic's strong results. [Table at top left-hand side of page entitled "Sector distribution2." The first listing is Consumer discretionary - 18%, the second is Information technology - 16%, the third is Health care - 16%, the fourth is Financials - 16%, the fifth is Industrials - 9%, the sixth is Energy - 6%, the seventh is Materials - 5%, the eighth is Consumer staples - 4%, the ninth is Utilities - 2% and the tenth is Telecommunication services - 1%.] In consumer services, the stock of hotel company Gaylord Enter tainment, which operates the Grand Ole Opry and other facilities catering to large meeting and event planners, performed well. Among other developments, the company narrowed its fourth-quarter loss to 22 cents a share from 40 cents per share the previous year. In consumer non-cyclicals, Playtex turned in a strong perform ance. We saw value in Playtex Products, Inc. because of its new management and the company's progress on its restructuring initiatives. [Pie chart just below the middle of page with heading "Portfolio diversification2." The chart is divided into two sections (from top to right): Common stocks 93% and Short-term investments & other 7%.] Some disappointments Retail was the Fund's poorest-performing group both in absolute terms and compared with the Russell index. The share price of upscale women's apparel retailer Cache lost ground in April when the company lowered its estimates for first-quarter sales and earnings, and trimmed forecasts for all of 2005. Disappointing sales growth also hampered the stock of specialty retailer Sharper Image Corp. In the technology sector, the Fund was hurt by its position in Avocent Corp., a maker of analog and digital switching systems used to manage multiple servers. The stock faltered, in part, because the company mispriced one of its new products. In financial services, Dollar Financial struggled, as the Federal Deposit Insurance Corporation (FDIC) issued new regulations that investors feared might limit the company's payday lending activities. We maintained our positions in all of these detractors because we viewed their problems as short-term and fixable. 4 [Table at top of page entitled "Scorecard." The header for the left column is "Investment" and the header for the right column is "Period's performance...and what's behind the numbers." The first listing is Cantel Medical followed by an up arrow with the phrase "Favorable acquisition boosts earnings." The second listing is Hologic followed by an up arrow with the phrase "New digital mammography technology." The third listing is Cache followed by a down arrow with the phrase "Disappointing sales growth."] Outlook While small-cap stocks have enjoyed strong appreciation during the past few years and are no longer the bargains they used to be, we believe valuations are not excessively high and the cycle of outperformance relative to large caps could continue for a while. We continue to find promising growth candidates in a variety of sectors, including health care and technology. The aging U.S. population, improving Medicare reimbursement rates and healthy increases in equipment spending by hospitals and physicians are some factors aiding the outlook for health care stocks. In technology, unpredictable spending for information technology products and services remains a challenge, leading us to focus on companies that either have made acquisitions we like or have promising new product cycles that could serve as a catalyst for the stock. However, we are open to investment ideas from any sector, provided that a stock passes our initial screens and its growth prospects are confirmed by further analysis and our independent information sources. "We continue to find promising growth candidates in a variety of sectors..." 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. See the prospectus for the risks of investing in small-cap stocks. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. 2 As a percentage of net assets on 4-30-05. 5 A LOOK AT PERFORMANCE For the period ended April 30, 2005 Class A 1 Class B Class C Class I 2 Inception date 12-16-98 12-6-04 12-6-04 12-6-04 Average annual returns with maximum sales charge (POP) One year 0.03% -- -- -- Five years 7.27 -- -- -- Since inception 9.80 -- -- -- Cumulative total returns with maximum sales charge (POP) Six months -2.86 -- -- -- One year 0.03 -- -- -- Five years 42.02 -- -- -- Since inception 81.36 -11.86 -8.15 -6.96 Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. Sales charge is not applicable for Class I shares. The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the Fund's current performance may be higher or lower than the performance shown. For performance data current to the most recent month-end, please call 1-800-225-5291 or visit the Fund's Web site at www.jhfunds.com. 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. 1 Effective December 3, 2004, shareholders of the former Independence Small Cap Portfolio became owners of that number of full and fractional shares of Class A shares of the John Hancock Small Cap Fund. Additionally, the accounting and performance history of the former Independence Small Cap Portfolio was redesignated as that of Class A of John Hancock Small Cap Fund. 2 For certain types of investors as described in the Fund's Class I share prospectus. 6 GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in two separate indexes. [Line chart with the heading "GROWTH OF $10,000." Within the chart are four lines. The first line represents Standard & Poor's SmallCap 600 Index and is equal to $19,783 as of April 30, 2005. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock Small Cap Fund, before sales charge, and is equal to $19,090 as of April 30, 2005. The third line represents the same value of the hypothetical $10,000 investment made in the John Hancock Small Cap Growth Fund, after sales charge, and is equal to $18,136 as of April 30, 2005. The fourth line represents Russell 2000 Index and is equal to $16,135 as of April 30, 2005.] Class B Class C Class I 1 Period beginning 12-6-04 12-6-04 12-6-04 Without sales charge $9,277 $9,277 $9,304 With maximum sales charge 8,814 9,185 9,304 Index 1 9,112 9,112 9,112 Index 2 9,450 9,450 9,450 Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B, Class C and Class I shares, respectively, as of April 30, 2005. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. Russell 2000 Index -- Index 1 -- is an unmanaged index composed of 2,000 U.S. small-capitalization stocks. Standard & Poor's SmallCap 600 Index -- Index 2 -- is an unmanaged index of 600 domestic stocks of small-size companies. It is not possible to invest directly in an index. Index figures do not reflect sales charges and would be lower if they did. 1 For certain types of investors as described in the Fund's Class I share prospectus. 7 YOUR EXPENSES These examples are intended to help you understand your ongoing operating expenses. Understanding fund expenses As a shareholder of the Fund, you incur two types of costs: * Transaction costs which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc. * Ongoing operating expenses including management fees, distribution and service fees (if applicable) and other fund expenses. We are going to present only your ongoing operating expenses here. Actual expenses/actual returns This example is intended to provide information about your fund's actual ongoing operating expenses, and is based on your fund's actual return. It assumes an account value of $1,000.00 on October 31, 2004, with the same investment held until April 30, 2005. Account value Expenses paid $1,000.00 Ending value during period on 10-31-04 on 4-30-05 ended 4-30-05 1 Class A $1,022.60 $8.39 Class B 2 927.70 8.96 Class C 2 927.70 8.96 Class I 2 930.40 4.22 Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at April 30, 2005 by $1,000.00, then multiply it by the "expenses paid" for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows: Example -- -- -- -- | My account value / | | "expenses paid" | My | / $1,000.00 = 8.6 | X $| | = actual | $8,600.00 / | | from table | expenses -- -- -- -- 8 Hypothetical example for comparison purposes This table allows you to compare your fund's ongoing operating expenses with those of any other fund. It provides an example of the Fund's hypothetical account values and hypothetical expenses based on each class's actual expense ratio and an assumed 5% annual return before expenses (which is not your fund's actual return). It assumes an account value of $1,000.00 on October 31, 2004, with the same investment held until April 30, 2005. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses. Account value Expenses paid $1,000.00 Ending value during period on 10-31-04 on 4-30-05 ended 4-30-05 1 Class A $1,016.50 $8.37 Class B 2 1,010.60 9.35 Class C 2 1,010.60 9.35 Class I 2 1,015.49 4.40 Remember, these examples do not include any transaction costs, such as sales charges; therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectus for details regarding transaction costs. 1 Expenses are equal to the Fund's annualized expense ratio of 1.67%, 2.35%, 2.35% and 1.10% for Class A, Class B, Class C and Class I, respectively, multiplied by the average account value over the period, multiplied by number of days in most recent fiscal half-year/365 or 366 (to reflect the one-half year period). 2 Class B, Class C and Class I shares began operations on 12-6-04. Ending values and expenses paid during the period are calculated for the period from 12-6-04 through 4-30-05. 9 FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2005 (unaudited) This schedule is divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's cash position, are listed last.
Issuer Shares Value Common stocks 93.05% $100,605,630 (Cost $103,762,213) Apparel Retail 1.92% 2,080,576 Cache, Inc. (I) 185,600 2,080,576 Apparel, Accessories & Luxury Goods 4.75% 5,134,439 Quiksilver, Inc. (I) 71,500 1,969,825 Warnaco Group, Inc. (The) (I) 140,900 3,164,614 Application Software 2.30% 2,489,004 Hyperion Solutions Corp. (I) 61,200 2,489,004 Auto Parts & Equipment 1.17% 1,268,820 LKQ Corp. (I) 63,000 1,268,820 Communications Equipment 2.41% 2,607,018 Avocent Corp. (I) 103,700 2,607,018 Consumer Finance 1.24% 1,341,522 Dollar Financial Corp. (I) 132,300 1,341,522 Diversified Commercial Services 1.95% 2,103,423 Source Interlink Cos., Inc. (I) 200,900 2,103,423 Diversified Metals & Mining 2.06% 2,230,302 Arch Coal, Inc. (L) 50,300 2,230,302 Electronic Equipment Manufacturers 4.44% 4,803,958 Daktronics, Inc. (I) 93,600 1,905,696 Excel Technology, Inc. (I) 78,200 1,641,418 X-Rite, Inc. 121,200 1,256,844 Electronic Manufacturing Services 2.45% 2,643,456 Trimble Navigation Ltd. (I) 76,800 2,643,456 See notes to financial statements. 10 FINANCIAL STATEMENTS Issuer Shares Value Health Care Equipment 9.06% $9,789,747 Candela Corp. (I) 245,400 2,223,324 Cantel Medical Corp. (I) 149,700 3,983,517 Hologic, Inc. (I)(L) 100,700 3,582,906 Health Care Facilities 2.23% 2,404,745 LifePoint Hospitals, Inc. (I) 54,100 2,404,745 Health Care Services 2.29% 2,474,160 SFBC International, Inc. (I) 79,300 2,474,160 Health Care Supplies 2.23% 2,405,476 Inverness Medical Innovations, Inc. (I) 102,100 2,405,476 Home Entertainment Software 1.69% 1,828,281 Take-Two Interactive Software, Inc. (I) 77,700 1,828,281 Hotels, Resorts & Cruise Lines 3.76% 4,064,000 Gaylord Entertainment Co. (I) 101,600 4,064,000 Industrial Machinery 1.63% 1,761,228 CLACOR, Inc. 34,800 1,761,228 Integrated Telecommunication Services 0.92% 990,564 Aspect Communications Corp. (I) 116,400 990,564 Internet Software & Services 3.14% 3,397,125 Lionbridge Technologies, Inc. (I) 265,200 1,127,100 Secure Computing Corp. (I) 256,500 2,270,025 Leisure Products 0.96% 1,037,151 Manning (Greg) Auctions, Inc. (I)(L) 107,700 1,037,151 Life & Health Insurance 2.37% 2,564,016 Scottish Re Group Ltd. (Cayman Islands) 109,200 2,564,016 Oil & Gas Equipment & Services 2.08% 2,250,440 Grant Prideco, Inc. (I) 101,600 2,250,440 Oil & Gas Exploration & Production 3.45% 3,732,454 Forest Oil Corp. (I) 55,000 2,119,150 Spinnaker Exploration Co. (I) 50,400 1,613,304 Packaged Foods & Meats 0.96% 1,034,825 Hain Celestial Group, Inc. (The) (I) 58,300 1,034,825 Personal Products 5.30% 5,733,220 Inter Parfums, Inc. (L) 161,100 2,327,895 Playtex Products, Inc. (I)(L) 335,500 3,405,325 See notes to financial statements. 11 FINANCIAL STATEMENTS Issuer Shares Value Property & Casualty Insurance 4.04% $4,369,020 National Interstate Corp. (I) 46,800 709,020 Philadelphia Consolidated Holding Corp. (I) 48,800 3,660,000 Publishing 1.74% 1,882,908 Courier Corp. 38,600 1,882,908 Railroads 3.49% 3,777,760 Genesee & Wyoming, Inc. (Class A)(I) 79,600 1,908,808 RailAmerica, Inc. (I) 181,100 1,868,952 Regional Banks 8.01% 8,656,890 Boston Private Financial Holdings, Inc. 85,500 1,910,070 EuroBancshares, Inc. (Puerto Rico) (I) 115,900 1,629,554 Fidelity Southern Corp. 19,700 311,260 First Community Bancorp. 36,600 1,513,410 Placer Sierra Bancshares 141,800 3,292,596 Specialty Chemicals 3.01% 3,259,082 Arch Chemicals, Inc. 61,300 1,580,314 Cytec Industries, Inc. 36,400 1,678,768 Specialty Stores 2.92% 3,152,622 Cost Plus, Inc. (I)(L) 65,100 1,509,669 Sharper Image Corp. (I)(L) 122,700 1,642,953 Trucking 1.01% 1,097,268 Overnite Corp. 36,600 1,097,268 Water Utilities 2.07% 2,240,130 Aqua America, Inc. (L) 83,900 2,240,130 Interest Par value Issuer, description, maturity date rate (000) Value Short-term investments 15.01% $16,229,694 (Cost $16,229,694) Joint Repurchase Agreement 4.93% 5,327,000 Investment in a joint repurchase agreement transaction with Bank of America Corp. -- Dated 04-29-05 due 05-02-05 (secured by U.S. Treasury STRIPS due 11-15-10 thru 08-15-25) 2.850% $5,327 5,327,000 Cash Equivalents 10.08% 10,902,694 AIM Cash Investment Trust (T) 10,902,694 10,902,694 See notes to financial statements. 12 FINANCIAL STATEMENTS Total investments 108.06% $116,835,324 Other assets and liabilities, net (8.06%) ($8,713,443) Total net assets 100.00% $108,121,881 (I) Non-income-producing security. (L) All or a portion of this security is on loan as of April 30, 2005. (T) Represents investment of securities lending collateral. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.
See notes to financial statements. 13 FINANCIAL STATEMENTS ASSETS AND LIABILITIES April 30, 2005 (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 $119,991,907) including $10,688,916 of securities loaned $116,835,324 Cash 436 Receivable for shares sold 2,288,903 Dividends and interest receivable 11,040 Receivable from affiliates 42,467 Other assets 28,291 Total assets 119,206,461 Liabilities Payable for shares repurchased 65,909 Payable upon receipt of securities loaned 10,902,694 Payable to affiliates Management fees 78,299 Distribution and service fees 4,275 Other 32,766 Other payables and accrued expenses 637 Total liabilities 11,084,580 Net assets Capital paid-in 111,775,092 Accumulated net realized loss on investments (142,896) Net unrealized depreciation of investments (3,156,583) Accumulated net investment loss (353,732) Net assets $108,121,881 Net asset value per share Based on net asset values and shares outstanding -- the Fund has an unlimited number of shares authorized with no par value Class A ($63,818,937 [DIV] 6,123,636 shares) $10.42 Class B ($5,289,195 [DIV] 508,715 shares) $10.40 Class C ($15,488,072 [DIV] 1,489,515 shares) $10.40 Class I ($23,525,677 [DIV] 2,254,585 shares) $10.43 Maximum offering price per share Class A 1 ($10.42 [DIV] 95%) $10.97 1 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. 14 FINANCIAL STATEMENTS OPERATIONS For the period ended April 30, 2005 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated. Investment income Dividends (net of foreign withholding taxes of $324) $81,953 Interest 51,866 Securities lending 4,823 Total investment income 138,642 Expenses Investment management fees 265,887 Class A distribution and service fees 56,740 Class B distribution and service fees 8,738 Class C distribution and service fees 23,611 Class A, B and C transfer agent fees 76,344 Class I transfer agent fees 2,342 Registration and filing fees 53,351 Custodian fees 14,013 Administration fees 11,302 Professional fees 10,379 Printing 8,246 Accounting and legal services fees 6,708 Miscellaneous 2,081 Trustees' fees 263 Securities lending fees 254 Total expenses 540,259 Less expense reductions (47,885) Net expenses 492,374 Net investment loss (353,732) Realized and unrealized gain (loss) Net realized gain on investments 138,009 Change in net unrealized appreciation (depreciation) of investments (5,112,754) Net realized and unrealized loss (4,974,745) Decrease in net assets from operations ($5,328,477) 1 Semiannual period from 11-1-04 through 4-30-05. See notes to financial statements. 15 FINANCIAL STATEMENTS CHANGES IN NET ASSETS These Statements of Changes in Net Assets show how the value of the Fund's net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of Fund share transactions. Year Period ended ended 10-31-04 4-30-05 1 Increase (decrease) in net assets From operations Net investment loss ($155,042) ($353,732) Net realized gain 3,645,067 138,009 Change in net unrealized appreciation (depreciation) (1,085,980) (5,112,754) Increase (decrease) in net assets resulting from operations 2,404,045 (5,328,477) Distributions to shareholders From net realized gain Class A (205,033) (3,749,244) From Fund share transactions 10,117,443 89,174,273 Net assets Beginning of period 15,708,874 28,025,329 End of period 2 $28,025,329 $108,121,881 1 Semiannual period from 11-1-04 through 4-30-05. Unaudited. 2 Includes accumulated net investment loss of none and $353,732, respectively. See notes to financial statements. 16 FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a share has changed since the end of the previous period. Period ended 10-31-00 10-31-01 10-31-02 1 10-31-03 10-31-04 4-30-05 2,3 Per share operating performance Net asset value, beginning of period $9.44 $14.64 $12.99 $8.22 $10.06 $11.44 Net investment loss 4 (0.12) (0.29) (0.16) (0.05) (0.09) (0.07) Net realized and unrealized gain (loss) on investments 5.32 (1.17) 0.36 5 2.22 1.61 0.43 Total from investment operations 5.20 (1.46) 0.20 2.17 1.52 0.36 Less distributions From net realized gain -- (0.19) (4.97) (0.33) (0.14) (1.38) Net asset value, end of period $14.64 $12.99 $8.22 $10.06 $11.44 $10.42 Total return 6,7 (%) 55.08 (9.92) (3.59) 27.41 15.25 2.26 8 Ratios and supplemental data Net assets, end of period (in millions) $24 $10 $11 $16 $28 $64 Ratio of expenses to average net assets (%) 1.39 1.97 2.28 1.18 1.23 1.67 9 Ratio of adjusted expenses to average net assets 10 (%) 1.49 2.07 2.69 2.60 2.23 1.85 9 Ratio of net investment loss to average net assets (%) (0.95) (1.54) (1.92) (0.57) (0.80) (1.20) 9 Portfolio turnover (%) 84 65 92 79 129 76
See notes to financial statements. 17 FINANCIAL HIGHLIGHTS CLASS B SHARES Period ended 4-30-05 3,11 Per share operating performance Net asset value, beginning of period $11.21 Net investment loss 4 (0.08) Net realized and unrealized loss on investments (0.73) Total from investment operations (0.81) Net asset value, end of period $10.40 Total return 6,7 (%) (7.23) 8 Ratios and supplemental data Net assets, end of period (in millions) $5 Ratio of expenses to average net assets (%) 2.35 9 Ratio of adjusted expenses to average net assets 10 (%) 2.53 9 Ratio of net investment loss to average net assets (%) (1.89) 9 Portfolio turnover (%) 76 See notes to financial statements. 18 FINANCIAL HIGHLIGHTS CLASS C SHARES Period ended 4-30-05 3,11 Per share operating performance Net asset value, beginning of period $11.21 Net investment loss 4 (0.08) Net realized and unrealized loss on investments (0.73) Total from investment operations (0.81) Net asset value, end of period $10.40 Total return 6,7 (%) (7.23) 8 Ratios and supplemental data Net assets, end of period (in millions) $15 Ratio of expenses to average net assets (%) 2.35 9 Ratio of adjusted expenses to average net assets 10 (%) 2.53 9 Ratio of net investment loss to average net assets (%) (1.90) 9 Portfolio turnover (%) 76 See notes to financial statements. 19 FINANCIAL HIGHLIGHTS CLASS I SHARES Period ended 4-30-05 3,11 Per share operating performance Net asset value, beginning of period $11.21 Net investment loss 4 (0.03) Net realized and unrealized loss on investments (0.75) Total from investment operations (0.78) Net asset value, end of period $10.43 Total return 6,7 (%) (6.96) 8 Ratios and supplemental data Net assets, end of period (in millions) $24 Ratio of expenses to average net assets (%) 1.10 9 Ratio of adjusted expenses to average net assets 10 (%) 1.28 9 Ratio of net investment loss to average net assets (%) (0.68) 9 Portfolio turnover (%) 76 1 On 6-24-02, the Advisors' Inner Circle Fund Independence Small Cap Portfolio acquired the assets and liabilities of the UAM Independence Small Cap Portfolio, a series of the UAM Funds, Inc. The operations of the Advisers' Inner Circle Fund Independence Small Cap Portfolio prior to the acquisition were those of the predecessor fund, the UAM Independence Small Cap Portfolio. 2 Effective 12-3-04, shareholders of the former Independence Small Cap Portfolio became owners of an equal number of full and fractional Class A shares of the John Hancock Small Cap Fund. Additionally, the accounting and performance history of the Independence Small Cap Portfolio was redesignated as that of Class A of John Hancock Small Cap Fund. 3 Semiannual period rom 11-1-04 through 4-30-05. Unaudited. 4 Based on the average of the shares outstanding. 5 The per share amount does not accord with the aggregate net losses on investments because of the sales and repurchase of the Fund's shares in relation to fluctuating market value of the investments in the Fund. 6 Assumes dividend reinvestment and does not reflect the effect of sales charges. 7 Total returns would have been lower had certain expenses not been reduced during the periods shown. 8 Not annualized. 9 Annualized. 10 Does not take into consideration expense reductions during the periods shown. 11 Class B, Class C and Class I shares began operations on 12-6-04. See notes to financial statements. 20 NOTES TO STATEMENTS Unaudited Note A Accounting policies John Hancock Small Cap 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 seek capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B, Class C and Class I shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under the terms of a distribution plan have exclusive voting rights to that distribution plan. The Fund is the accounting and performance successor to Independence Small Cap Portfolio, a diversified open-end management investment company organized as a Massachusetts business trust. On December 3, 2004, the Fund acquired substantially all the assets and assumed the liabilities of the former Independence Small Cap Portfolio pursuant to an agreement and plan of reorganization, in exchange for Class A shares of the Fund. 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 which have a remaining maturity of 60 days or less may be valued at amortized cost, which approximates market value. Investments in AIM Cash Investment Trust are valued at net asset value each business day. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of John Hancock Financial Services, Inc., may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible 21 for ensuring that the agreement is fully collateralized at all times. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net asset value of the respective classes. Distri bution and service fees, if any, and transfer agent fees for Class I shares, are calculated daily at the class level based on the appropriate net asset value of each class and the specific expense rate(s) applicable to each class. Expenses The majority of expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative size 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, 2005. Securities lending The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially. On April 30, 2005, the Fund loaned securities having a market value of $10,688,916 collateralized by cash in the amount of $ 10,902,694. The cash collateral was invested in a short-term instrument. Security lending expenses are paid by the Fund to the Adviser. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. 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, if any, on the ex-dividend date. During the year ended October 31, 2004, the tax character of distributions paid was as follows: long-term capital gain of $205,033. 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 22 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 daily management fee to the Adviser at an annual rate of 0.90% of the Fund's average daily net asset value. The Adviser has a subadvisory agreement with Inde pendence Investments, LLC ("Independence"). The Fund is not responsible for payment of the subadvisory fees. Prior to December 3, 2004, Independence provided the Fund with investment management services, for which the Fund paid a fee at an annual rate of 0.85% of the Fund's average daily net asset value. Effective December 3, 2004, the Adviser has agreed to limit the Fund's total expenses, excluding distribution and service fees, and transfer agent fees, to 1.05% of the Fund's average daily net asset value, with respect to Class A, Class B and Class C shares, on an annual basis, Class A total expenses to 1.65% of Class A average daily net asset value, and Class I total expenses to 1.10% of Class I average net asset value, at least until February 28, 2006. Prior to December 3, 2004, Independence had agreed to limit the Fund's total expenses to 1.85% of the Fund's average daily net asset value. Accordingly, the expense reductions related to the Fund's total expense limitations amounted to $47,885 for the period ended April 30, 2005. The Adviser reserves the right to terminate this limitation in the future. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C, pursuant to Rule 12b-1 under the Investment Company Act of 1940, to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net asset value and 1.00% of Class B and Class C average daily net asset value. A maximum of 0.25% of such payments may be service fees, as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Prior to December 3, 2004, SEI Investments Distribution Co. was the distributor for the Fund and received no compensation for its distribution services. Class A shares are assessed up-front sales charges. During the period ended April 30, 2005, JH Funds received net up-front sales charges of $391,787 with regard to sales of Class A shares. Of this amount, $60,777 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $327,267 was paid as sales commissions to unrelated broker-dealers and $3,743 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator 23 Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insur ance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. 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, 2005, CDSCs received by JH Funds amounted to $1,445 for Class B shares and $1,066 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. ("Signature Services"), an indirect subsidiary of JHLICo. For Class A, Class B and Class C shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.05% of each class's average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses, aggregated and allocated to each class on the basis of its relative net asset value. For Class I shares the Fund pays a monthly transfer agent fee at a total annual rate of 0.05% of Class I average daily net asset value. The Adviser has agreed to limit transfer agent fees on Class A, Class B and Class C shares to 0.30% of each class's average daily net asset value, at least until February 28, 2006. There were no transfer agent fee reductions during the period ended April 30, 2005. Signature Services has also agreed to voluntarily reduce the Fund's asset-based portion of the transfer agent fee if the total transfer agent fee exceeds the Lipper, Inc. median transfer agency fee for comparable mutual funds by 0.05%. Signature Services reserves the right to terminate these limitations in the future. Prior to December 3, 2004, DST Systems, Inc. served as the Fund's transfer agent. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period amounted to $6,708. The Fund also paid the Adviser the amount of $1,911 for certain publishing services, included in the printing fees. Prior to December 3, 2004, SEI Investments Global Funds Services served as administrator of the Fund and was paid a fee of 0.65% of the Fund's average daily net assets, which amounted to $11,302 during the period from October 31, 2004 to December 3, 2004. Mr. James A. Shepherdson is a director and officer of the Adviser, as well as affiliated Trustee of the Fund, and is compensated by the Adviser. 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 Compen sation 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. 24 Note C Fund share transactions This listing illustrates the number of Fund's shares sold, reinvested and repurchased during the last two periods, along with the corresponding dollar value.
Year ended 10-31-04 Period ended 4-30-05 1 Shares Amount Shares Amount Class A shares Sold 1,421,739 $15,880,583 4,628,018 $52,004,998 Distributions reinvested 20,274 204,967 -- -- Repurchased (553,670) (5,968,107) (953,725) (10,890,957) Net increase 888,343 $10,117,443 3,674,293 $41,114,041 Class B shares 2 Sold -- -- 536,611 $5,977,289 Repurchased -- -- (27,896) (304,371) Net increase -- -- 508,715 $5,672,918 Class C shares 2 Sold -- -- 1,502,066 $16,728,111 Repurchased -- -- (12,551) (140,575) Net increase -- -- 1,489,515 $16,587,536 Class I shares 2 Sold -- -- 2,446,874 $27,952,876 Repurchased -- -- (192,289) (2,153,098) Net increase -- -- 2,254,585 $25,799,778 Net increase 888,343 $10,117,443 7,927,108 $89,174,273
1 Semiannual period from 11-1-04 through 4-30-05. Unaudited. 2 Class B, Class C and Class I shares began operations on 12-6-04. 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, 2005, aggregated $122,018,612 and $43,355,577 respectively. The cost of investments owned on April 30, 2005, including short-term investments, for federal income tax purposes, was $119,991,907. Gross unrealized appreciation and depreciation of investments aggregated $4,581,862 and $7,738,445, respectively, resulting in net unrealized depreciation of $3,156,583. Note E Acquisition On December 3, 2004, the Fund acquired substantially all of the assets and liabilities of the former Independence Small Cap Portfolio in exchange solely for Class A shares of the Fund. The acquisition was accounted for as a tax-free exchange of 3,077,385 Class A shares of the Fund for the net assets of the former Independence Small Cap Portfolio, which amounted to $34,820,978, including $5,042,523 of unrealized appreciation, after the close of business on December 3, 2004. Accounting and performance history of the former Independence Small Cap Portfolio was redesignated as that of Class A of John Hancock Small Cap Fund. 25 OUR FAMILY OF FUNDS -------------------------------------------------------- Equity Balanced Fund Classic Value Fund Core Equity Fund Focused Equity Fund Greater China Opportunities Fund Growth Trends Fund International Fund Large Cap Equity Fund Large Cap Select Fund Mid Cap Growth Fund Multi Cap Growth Fund Small Cap Fund Small Cap Equity Fund Small Cap Growth Fund Sovereign Investors Fund U.S. Global Leaders Growth Fund -------------------------------------------------------- Sector Financial Industries Fund Health Sciences Fund Real Estate Fund Regional Bank Fund Technology Fund -------------------------------------------------------- Income Bond Fund Government Income Fund High Income Fund High Yield Fund Investment Grade Bond Fund Strategic Income Fund -------------------------------------------------------- Tax-Free Income California Tax-Free Income Fund High Yield Municipal Bond Fund Massachusetts Tax-Free Income Fund New York Tax-Free Income Fund Tax-Free Bond Fund -------------------------------------------------------- Money Market Money Market Fund U.S. Government Cash Reserve --------------------------------------------------------- A fund's investment objectives, risks, charges and expenses are included in the prospectus and should be considered carefully before investing. For a prospectus, call your financial professional, call John Hancock Funds at 1-800-225-5291 or visit our Web site at www.jhfunds.com. Please read the prospectus carefully before investing or sending money. 26 ELECTRONIC DELIVERY Now available from John Hancock Funds Instead of sending annual and semiannual reports and prospectuses through the U.S. mail, we'll notify you by e-mail when these documents are available for online viewing. How does electronic delivery benefit you? * No more waiting for the mail to arrive; you'll receive an e-mail notification as soon as the document is ready for online viewing. * Reduces the amount of paper mail you receive from John Hancock Funds. * Reduces costs associated with printing and mailing. Sign up for electronic delivery today at www.jhfunds.com/edelivery 27 OUR WEB SITE A wealth of information -- www.jhfunds.com View the latest information for your account. ------------------------------------------------ Transfer money from one account to another. ------------------------------------------------ Get current quotes for major market indexes. ------------------------------------------------ Use our online calculators to help you with your financial goals. ------------------------------------------------ Get up-to-date commentary from John Hancock Funds investment experts. ------------------------------------------------ Access forms, applications and tax information. ------------------------------------------------ 28 For more information The Fund's proxy voting policies, procedures and records are available without charge, upon request: By phone On the Fund's Web site On the SEC's Web site 1-800-225-5291 www.jhfunds.com/proxy www.sec.gov Trustees Charles L. Ladner, Chairman* James F. Carlin Richard P. Chapman, Jr.* William H. Cunningham Ronald R. Dion Dr. John A. Moore* Patti McGill Peterson* Steven R. Pruchansky James A. Shepherdson Lt. Gen. Norman H. Smith, USMC (Ret.) *Members of the Audit Committee Officers James A. Shepherdson President and Chief Executive Officer William H. King Vice President and Treasurer Investment adviser John Hancock Advisers, LLC 101 Huntington Avenue Boston, MA 02199-7603 Subadviser Independence Investment LLC 53 State Street Boston, MA 02109 Principal distributor John Hancock Funds, LLC 101 Huntington Avenue Boston, MA 02199-7603 Custodian The Bank of New York One Wall Street New York, NY 10286 Transfer agent John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 Legal counsel Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, MA 02109-1803 The Fund's investment objective, risks, charges and expenses are included in the prospectus and should be considered carefully before investing. For a prospectus, call your financial professional, call John Hancock Funds at 1-800-225-5291, or visit the Fund's Web site at www.jhfunds.com. Please read the prospectus carefully before investing or sending money. How to contact us Internet www.jhfunds.com Mail Regular mail: Express mail: John Hancock John Hancock Signature Services, Inc. Signature Services, Inc. 1 John Hancock Way, Suite 1000 Mutual Fund Image Operations Boston, MA 02217-1000 529 Main Street Charlestown, MA 02129 Phone Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 A listing of month-end portfolio holdings is available on our Web site, www.jhfunds.com. A more detailed portfolio holdings summary is available on a quarterly basis 60 days after the fiscal quarter on our Web site or upon request by calling 1-800-225-5291, or on the Securities and Exchange Commission's Web site, www.sec.gov. 29 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhfunds.com/edelivery This report is for the information of the shareholders of John Hancock Small Cap Fund. 820SA 4/05 6/05 ITEM 2. CODE OF ETHICS. As of the end of the period, April 30, 2005, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer, Chief Financial Officer and Treasurer (respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the "Senior Financial Officers"). A copy of the code of ethics is filed as an exhibit to this Form N-CSR. The code of ethics was amended effective February 1, 2005 to address new Rule 204A-1 under the Investment Advisers Act of 1940 and to make other related changes. The most significant amendments were: (a) Broadening of the General Principles of the code to cover compliance with all federal securities laws. (b) Eliminating the interim requirements (since the first quarter of 2004) for access persons to preclear their personal trades of John Hancock mutual funds. This was replaced by post-trade reporting and a 30 day hold requirement for all employees. (c) A new requirement for "heightened preclearance" with investment supervisors by any access person trading in a personal position worth $100,000 or more. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable at this time. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The registrant has adopted procedures by which shareholders may recommend nominees to the registrant's Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached "John Hancock Funds - Administration Committee Charter" and "John Hancock Funds - Governance Committee Charter". ITEM 11. CONTROLS AND PROCEDURES. (a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Code of Ethics for Senior Financial Officers is attached. (a)(2) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference. (c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached "John Hancock Funds - Administration Committee Charter" and "John Hancock Funds - Governance Committee Charter". (c)(2) Contact person at the registrant. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. John Hancock Equity Trust By: ------------------------------ James A. Shepherdson President and Chief Executive Officer Date: June 30, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: ------------------------------ James A. Shepherdson President and Chief Executive Officer Date: June 30, 2005 By: ------------------------------ William H. King Vice President and Treasurer Date: June 30, 2005