<PAGE> 1
JOHN HANCOCK FUNDS
- --------------------------------------------------------------------------------
GLOBAL
TECHNOLOGY
FUND
ANNUAL REPORT
December 31, 1995
<PAGE> 2
DIRECTORS
Edward J. Boudreau, Jr.
Thomas W. L. Cameron
James F. Carlin
William H. Cunningham*
Charles F. Fretz*
Jack P. Gould*
Harold R. Hiser, Jr.*
Charles L. Ladner*
Leo E. Linbeck, Jr.*
Patricia P. McCarter*
Steven R. Pruchansky*
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan*
* Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Barry J. Gordon
President
Anne C. Hodsdon
Executive Vice President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President, Assistant Secretary
and Compliance Officer
James J. Stokowski
Vice President and Treasurer
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
TRANSFER AGENT
John Hancock Investors Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENT AUDITORS
Price Waterhouse llp
160 Federal Street
Boston, Massachusetts 02110
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
The stock market's record-breaking, whirlwind performance in 1995 will be a
tough act to follow in 1996. In fact, we've already seen greater market
volatility this year, particularly among last year's leaders -- technology
stocks. That's to be expected after a year that saw market indexes soar,
including the Standard & Poor's 500-Stock Index's 37% advance. While many of the
same economic conditions that fostered the stellar 1995 market are still in
place -- slow economic growth, muted inflation and decent corporate earnings --
it would be unrealistic to expect the market to stage a repeat in 1996. The old
saying "trees don't grow to the sky" comes to mind. Shareholders would do well
to temper expectations of investment returns and perhaps revisit their
investment allocations with their financial advisor to determine if rebalancing
their portfolio makes sense.
No matter how you scale back your market expectations, you should always be
able to count on consistent customer service performance. At John Hancock Funds,
we never stop working to find ways to sustain and improve the quality of
information and the level of assistance we provide you. Our commitment to this
task is no less than John Hancock's loyalty was to his fledgling country when he
is said to have uttered, "if it does the public good, burn Boston." We won't go
that far, of course, but we share our namesake's dedication to putting the
public before all else.
In our case, that public is you, our shareholders. We take very seriously the
role you have entrusted to us, that of helping you achieve your financial goals.
Part of that will always involve good customer service. So please do not
hesitate to call your Customer Service Representative at 1-800-225-5291 if you
have any questions or need information. We take pride in helping you with the
same spirit that John Hancock displayed at the dawning of America.
Sincerely,
/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY BARRY GORDON AND MARC KLEE, CO-PORTFOLIO MANAGERS
JOHN HANCOCK GLOBAL
TECHNOLOGY FUND
TECHNOLOGY STOCKS AMONG LEADERS IN A STELLAR 1995;
FUND OUTPERFORMS PEERS
Last summer, shareholders of John Hancock National Aviation & Technology Fund
approved the merger of their fund with John Hancock Global Technology Fund. The
merger was effective July 28, 1995.
The U.S. stock market had a sensational run in 1995, led by technology and a
number of other industries. For the year, the Standard & Poor's 500-Stock Index
- -- the most common measure of the broad stock market -- rose by 37% and the
Nasdaq Composite Index, which is filled with technology stocks, rose by almost
40%. These gains resulted from a near-perfect environment for stocks in general
and technology stocks in particular. The combination of declining interest
rates, muted inflation and strong corporate earnings provided the impetus for
many companies to increase their spending on capital goods, primarily in the
area of computers and other productivity-enhancing technology. That translated
into higher earnings for technology companies. Globally, this drive to higher
productivity provided technology companies with a platform for earnings growth,
particularly U.S. companies which benefited from a weak dollar that made their
products more competitive overseas.
[A 2 1/4" x 3" photo of Barry Gordon and Marc Klee at bottom right. Caption
reads: "Barry Gordon (left) and Marc Klee (right), Co-Portfolio Managers."]
Only in the last quarter did U.S. tech stocks, particularly the semiconductor
companies, pull back on investors' fears of slowing 1996 earnings growth and
lower margins. But that
[CAPTION]
"THE U.S. STOCK MARKET HAD A SENSATIONAL RUN IN 1995..."
3
<PAGE> 4
John Hancock Funds - Global Technology Fund
[Chart with the heading "Top Five Common Stock Holdings" at top of left hand
column. The chart lists five holdings: 1) Applied Materials 4.5% 2) Computer
Associates 4.5%; 3) UAL 3.7% 4) Oracle Systems 3.3% and 5) Cisco Systems 2.9%. A
footnote below reads: "As a percentage of net assets on December 31, 1995."]
correction came too late in the year to squelch the Fund's rewarding returns,
both in absolute and competitive terms. For the year ended December 31, 1995,
the Fund's Class A and Class B shares posted total returns, at net asset value,
of 46.53% and 45.42% respectively. That compared to the average science and
technology fund's total return for the year of 37.74%, according to Lipper
Analytical Services.(1)
PERFORMANCE BOOSTERS
We attribute the Fund's strong performance in 1995 primarily to three things.
First, during the year we reduced the Fund's foreign holdings, which had been a
drag on performance during 1994, from 12% at the end of 1994 to 8% at the end of
1995. While we remain committed to capitalizing on the inevitable growth of
technology worldwide, we currently see the best prospects coming from U.S.
technology companies. Second, we successfully managed our allocations among
various key subsectors of the technology market. That included paring our
semiconductor holdings, mostly in advance of the sector's fourth quarter
decline, and increasing our exposure to the networking and communications area,
which surged in the second half on heightened interest in the Internet
phenomenon. Third, the Fund got a lift from some of the airlines and aerospace
holdings it inherited in the merger with John Hancock National Aviation &
Technology Fund, a fund which was also under our management. Several of those
stocks, which accounted for 19% of the Fund's net assets at the end of the
period, were some of the Fund's best performers in the second half. That
included airline company stocks such as AMR, the parent company of American
Airlines, Northwest Air and UAL, the parent of United Airlines, whose stock was
up more than 100% for the year. In what was a turnaround year for the airline
industry as a whole, these three companies in particular generated strong cash
flow because they kept labor costs down while increasing revenues per employee.
SEMICONDUCTORS: REDUCED POSITION
AS SUPPLY CATCHES UP TO DEMAND
We began to reduce our semiconductor position late in the third quarter, cutting
it almost in half from June, when the sector represented 30% of the Fund's net
assets, to 17% at the end of the period. We took this action because supply
appears to be catching up to demand, in fact even surpassing it in some areas,
even
[Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investment"; the header for the right column is "Recent
performance ... and what's behind the numbers. The first listing is Cheyenne
Software followed by an up arrow and the phrase "Stock rebounds after short-term
earnings glitch ends." The second listing is Iomega followed by an up arrow and
the phrase "Sales soar with hot memory-boosting product." The third listing is
Silicon Graphics followed by a down arrow and the phrase "Earnings momentum
slows along with demand for product." Footnote below reads: "See "Schedule of
Investments." Investment holdings are subject to change."]
[CAPTION]
"WE BEGAN TO REDUCE OUR SEMICONDUCTOR POSITION LATE IN THE THIRD QUARTER..."
4
<PAGE> 5
John Hancock Funds - Global Technology Fund
[Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the year ended December 31, 1995." The chart is
scaled in increments of 10% from bottom to top, with 50% at the top and 0% at
the bottom. Within the chart, there are three solid bars. The first represents
the 46.53% total return for John Hancock Global Technology Fund: Class A. The
second represents the 45.42% total return for John Hancock Global Technology
Fund: Class B. The third represents the 37.74% total return for the average
science and technology fund. Footnote below reads: "Total returns for John
Hancock Global Technology Fund are at net asset value with all distributions
reinvested. The average science and technology fund is tracked by Lipper
Analytical Services. See page seven for historical performance information."]
though demand has remained relatively strong. With the end of the supply/demand
imbalance, we think the bulk of the stock performance gains in this sector are
behind us for the near-to-intermediate term. Our decision served us well, since
semiconductor stocks were the single worst performing sector of the stock market
in the fourth quarter. Whether this pullback lasts a few months or several years
remains to be seen and depends largely on demand. One area in particular that we
are avoiding is the memory subsector, which is being hit hardest from a
supply/demand standpoint. For instance, we sold our entire positions in a number
of semiconductor companies, including Cypress Semiconductor, Motorola, Advanced
Micro Devices and Integrated Device Technology, which was the Fund's third
largest holding in June. That's not to say we're turning our backs entirely on
the semiconductor sector. We still believe that microchips will continue to be
used in a growing number of products in the future, from computers to cellular
phones to automobiles and that, despite some ups and downs, these companies will
remain very profitable in 1996. But we think there will be a general slowdown in
earnings growth for a while. So for now, we're sticking with companies that we
believe will continue to have strong growth, companies such as LSI Logic,
Teradyne and Applied Materials.
NETWORKING AND COMMUNICATIONS
BECOMES THE LEADING SECTOR
As we scaled back the semiconductor stocks, we increased exposure to networking
and communications companies to 21% of net assets at year end, partially in
response to the interest in Internet-related stocks in the second half. Here,
our goal is to play indirectly off the Internet, not through online servers or
providers (with the exception of America Online which the Fund owns), but rather
through the equipment companies that let computers hook into the Internet or
help companies communicate internally. A good example is Canadian-based
Hummingbird Communications, which has a unique niche providing software for
Internet use. Our major holdings in this area include Cisco Systems,
- --------------------------------------------------------------------------------
(1) Figures from Lipper Analytical Services include reinvested dividends and do
not take into account sales charges. Actual load-adjusted performance is
lower.
International and sector investing involves special risks as detailed in
the prospectus.
This commentary reflects the views of the portfolio managers through the
end of the Fund's period discussed in this report. Of course, the managers'
views are subject to change as market and other conditions warrant.
[CAPTION]
"...1996 WILL BE A MORE MODERATE YEAR FOR BOTH THE STOCK MARKET AND TECHNOLOGY
STOCKS."
5
<PAGE> 6
John Hancock Funds - Global Technology Fund
Bay Networks, 3COM and Cheyenne Software, which has a variety of software
products for networking applications. Cheyenne was one of our strongest
performers for the year, with its stock more than doubling after a difficult
1994.
PRODUCTIVITY ENHANCEMENT REMAINS STEADY
Throughout the year, the Fund maintained a fairly steady position in companies
that sell productivity-enhancing software to help companies maintain and
efficiently use their existing hardware. Our largest holding is Computer
Associates International, which has a broad array of software for mainframe
computer enhancements. We recently added Novadigm, which has software that helps
companies control the internal distribution of software applications.
OUTLOOK
In our view, 1996 will be a more moderate year for both the overall stock market
and technology stocks. Investors would do well to temper their expectations and
expect further volatility that is characteristic of this sector. On a relative
basis, however, we think technology stocks should continue to turn in a solid
performance. Despite the price run-up last year, these stocks still appear to be
fairly valued. Earnings momentum for tech companies, while not maintaining their
stellar 1995 levels, should still outpace the average S&P 500 company because so
many technology sectors are still so early in their growth cycle, both here and
overseas. We'll continue to seek opportunities in those sectors, further
increasing our networking and communications holdings and de-emphasizing
semiconductors.
6
<PAGE> 7
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the average annual
total returns for the John Hancock Global Technology Fund. Total return is a
performance measure that equals the sum of all dividends and capital gains,
assuming reinvestment of these distributions and the change in the price of the
Fund's average net assets. Performance figures include the maximum applicable
sales charge of 5% for Class A shares. The effect of the maximum contingent
deferred sales charge for Class B shares (maximum 5% and declining to 0% over
six years) is included in Class B performance. Performance is affected by a
12b-1 plan, which commenced on January 1, 1994 for both Class A and Class B
shares. Different sales charge schedules for Class A shares were in effect prior
to March 1987 and are not reflected in the performance information. Remember
that all figures represent past performance and are no guarantee of how the Fund
will perform in the future. Also, keep in mind that the total return and share
price of the Fund's investments will fluctuate. As a result, your Fund's shares
may be worth more or less than their original cost, depending on when you sell
them.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED DECEMBER 31, 1995
ONE FIVE MOST RECENT
YEAR YEARS TEN YEARS
---- ----- ---------
<S> <C> <C> <C>
Global Technology Fund: Class A 39.20% 184.39% 216.07%
Global Technology Fund: Class B 40.42% 55.99%(1) N/A
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED DECEMBER 31, 1995
ONE FIVE MOST RECENT
YEAR YEARS TEN YEARS
---- ----- -----------
<S> <C> <C> <C>
Global Technology Fund: Class A 39.20% 23.25% 12.20%
Global Technology Fund: Class B 40.42% 25.03%(1) N/A
</TABLE>
NOTES TO PERFORMANCE
(1) Class B shares started on January 3, 1994.
7
<PAGE> 8
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John Hancock
Global Technology Fund would be worth on December 31, 1995, assuming you have
been invested for the past ten years or since the day each class of shares
started and reinvested all distributions. For comparison, we've shown the same
$10,000 investment in the Standard & Poor's 500 Stock Index -- an unmanaged
index that includes 500 widely traded common stocks and is used often as a
measure of stock market performance.
GLOBAL TECHNOLOGY FUND: CLASS A SHARES
Line chart with the heading Global Technology Fund: Class A, representing the
growth of a hypothetical $10,000 investment over the life of the fund. Within
the chart are three lines.
The first line represents the value of the Standard & Poor's 500 Stock Index and
is equal to $39,955 as of December 31, 1995. The second line represents the
value of the hypothetical $10,000 investment made in the Global Technology Fund
on December 31, 1985, before sales charge, and is equal to $33,262 as of
December 31, 1995. The third line represents the Global Technology Fund after
sales charge and is equal to $31,607 as of December 31, 1995.
GLOBAL TECHNOLOGY FUND: CLASS B SHARES
Line chart with the heading Global Technology Fund: Class B, representing the
growth of a hypothetical $10,000 investment over the life of the fund. Within
the chart are three lines.
The first line represents the value of the hypothetical $10,000 investment made
in the Global Technology Fund on January 3, 1994, before contingent deferred
sales charge, and is equal to $15,999 as of December 31, 1995. The second line
represents the Global Technology Fund after contingent deferred sales charge and
is equal to $15,999 as of December 31, 1995. The third line represents the
value of the Standard & Poor's 500 Stock Index and is equal to $13,934 as of
December 31, 1995.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON DECEMBER 31, 1995. YOU'LL
ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF
THAT DATE.
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $107,519,167)................. $173,855,982
Rights and warrants (cost - $49,000)................ 227,498
Bonds (cost - $1,495,043)........................... 1,464,034
Joint repurchase agreement (cost - $16,364,000)..... 16,364,000
Corporate savings account........................... 8,636
------------
191,920,150
Receivable for shares sold............................ 379,370
Dividends receivable.................................. 15,500
Interest receivable................................... 44,722
Miscellaneous receivable.............................. 16,941
Other assets.......................................... 3,869
------------
Total Assets....................... 192,380,552
--------------------------------------------------
LIABILITIES:
Payable for shares repurchased........................ 115,874
Payable for investments purchased..................... 1,234,063
Payable to John Hancock Advisers, Inc.
and affiliates - Note B............................. 185,642
Accounts payable and accrued expenses................. 90,135
------------
Total Liabilities.................. 1,625,714
--------------------------------------------------
NET ASSETS:
Capital paid-in....................................... 124,270,534
Net unrealized appreciation of investments............ 66,484,304
------------
Net Assets......................... $190,754,838
==================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - 200 million shares authorized
with $0.20 per share par value, respectively)
Class A - $155,001,288/6,324,664...................... $ 24.51
======================================================================
Class B - $35,753,550/1,484,627....................... $ 24.08
======================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($24.51 x 105.26%).......................... $ 25.80
======================================================================
<FN>
* 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.
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS FOR THE PERIOD
STATED.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended December 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest.............................................. $ 749,744
Dividends (net of foreign withholding taxes $4,795)... 248,870
-----------
998,614
-----------
Expenses:
Investment management fee - Note B................... 1,195,680
Transfer agent fee - Note B.......................... 378,566
Distribution/service fee - Note B
Class A............................................ 315,339
Class B............................................ 227,106
Administration fee - Note B.......................... 99,726
Registration and filing fees......................... 72,008
Printing............................................. 57,518
Custodian fee........................................ 42,394
Auditing fee......................................... 38,833
Trustees' fees....................................... 15,271
Miscellaneous........................................ 9,960
Legal fees........................................... 5,842
Less Management Fee Reduction - Note B............... (150,000)
-----------
Total Expenses..................... 2,308,243
-------------------------------------------------
Net Investment Loss................ (1,309,629)
-------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments sold................ 13,461,306
Change in net unrealized appreciation/depreciation
of investments..................................... 13,067,131
-----------
Net Realized and Unrealized
Gain on Investments................ 26,528,437
-------------------------------------------------
Net Increase in Net Assets
Resulting from Operations.......... $25,218,808
=================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994
-------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss.............................................................................. ($ 1,309,629) ($ 682,853)
Net realized gain on investments sold and options................................................ 13,461,306 4,736,133
Change in net unrealized appreciation/depreciation of investments................................ 13,067,131 ( 78,528)
------------- ------------
Net Increase in Net Assets Resulting from Operations........................................... 25,218,808 3,974,752
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain on investments, options and foreign currency transactions
Class A - ($1.6414 and $1.2625 per share, respectively)........................................ (9,890,377) ( 3,443,707)
Class B ** - ($1.6414 and $1.2625 per share, respectively)..................................... (2,261,154) (614,018)
------------- ------------
Total Distributions to Shareholders.......................................................... (12,151,531) ( 4,057,725)
------------- ------------
FROM FUND SHARE TRANSACTIONS -- NET*............................................................... 116,170,259 19,850,814
------------- ------------
NET ASSETS:
Beginning of period.............................................................................. 61,517,302 41,749,461
------------- ------------
End of period.................................................................................... $190,754,838 $61,517,302
============= ============
<FN>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1995 1994
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................................ 3,475,266 $84,847,624 1,628,280 $29,997,844
Shares issued in reorganization - Note E........... 2,736,868 75,930,600 -- --
Shares issued to shareholders in reinvestment of
distributions................................... 326,658 8,057,488 184,986 3,235,355
---------- ------------ ---------- ------------
6,538,792 168,835,712 1,813,266 33,233,199
Less shares repurchased............................ (3,139,612) ( 76,326,307) (1,279,970) ( 22,995,150)
---------- ------------ ---------- ------------
Net increase..................................... 3,399,180 $92,509,405 533,296 $10,238,049
========== ============ ========== ============
CLASS B**
Shares sold........................................ 2,136,672 $52,751,817 563,553 $10,264,273
Shares issued in reorganization - Note E........... 21,055 576,404 -- --
Shares issued to shareholders in reinvestment of
distributions................................... 83,607 2,026,634 33,535 581,498
---------- ------------ ---------- ------------
2,241,334 55,354,855 597,088 10,845,771
Less shares repurchased............................ (1,283,970) ( 31,694,001) ( 69,825) ( 1,233,006)
---------- ------------ ---------- ------------
Net increase..................................... 957,364 $23,660,854 527,263 $ 9,612,765
========== ============ ========== ============
<FN>
**Class B shares commenced operations January 3, 1994.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios, and supplemental data are as
follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
--------------- ----------- --------- ------------ --------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period.......................... $ 17.84 $ 17.45 $ 14.94 $ 15.60 $ 12.44
-------- ------- ------- ------- -------
Net Investment Income (Loss).................................. (0.22)(a)(b) (0.22)(a) (0.21) (0.15)(b) 0.05
Net Realized and Unrealized Gain on Investments, Options and
Foreign Currency Transactions............................... 8.53 1.87 4.92 1.00 4.11
-------- ------- ------- ------- -------
Total from Investment Operations.......................... 8.31 1.65 4.71 0.85 4.16
-------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income.......................... -- -- -- -- (0.04)
Distributions from Net Realized Gain on Investments Sold,
Options and Foreign Currency Transactions................... (1.64) (1.26) (2.20) (1.51) (0.96)
-------- ------- ------- ------- -------
Total Distributions....................................... (1.64) (1.26) (2.20) (1.51) (1.00)
-------- ------- ------- ------- -------
Net Asset Value, End of Period................................ $ 24.51 $ 17.84 $ 17.45 $ 14.94 $ 15.60
======== ======= ======= ======= =======
Total Investment Return at Net Asset Value (f)................ 46.53% 9.62% 32.06% 5.70%(c) 33.05%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)..................... $155,001 $52,193 $41,749 $32,094 $31,580
Ratio of Expenses to Average Net Assets....................... 1.67% 2.16% 2.10% 2.05%(b) 2.32%
Ratio of Net Investment Income (Loss) to Average Net Assets... (0.89%) (1.25%) (1.49%) (0.88%)(b) 0.34%
Portfolio Turnover Rate....................................... 70% 67% 86% 76% 67%
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: NET INVESTMENT INCOME, GAINS (LOSSES),
DIVIDENDS AND TOTAL INVESTMENT RETURN OF THE FUND. IT SHOWS HOW THE FUND'S NET
ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD.
ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN THE
FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1995 1994
-------------- ------------
<S> <C> <C>
CLASS B (d)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period....................................................... $ 17.68 $17.24(e)
------- ------
Net Investment Loss........................................................................ (0.39)(a)(b) (0.35)(a)
Net Realized and Unrealized Gain on Investments and Options................................ 8.43 2.05
------- ------
Total from Investment Operations......................................................... 8.04 1.70
------- ------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and Options....................... (1.64) (1.26)
------- ------
Net Asset Value, End of Period............................................................. $ 24.08 $17.68
======= ======
Total Investment Return at Net Asset Value (f)............................................. 45.42% 10.02%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).................................................. $35,754 $9,324
Ratio of Expenses to Average Net Assets.................................................... 2.41% 2.90%*
Ratio of Net Investment Loss to Average Net Assets......................................... (1.62%) (1.98%)*
Portfolio Turnover Rate.................................................................... 70% 67%
<FN>
* On an annualized basis.
(a) On average month end shares outstanding.
(b) Reflects voluntary fee reductions and expense limitations in effect during
the years ended December 31, 1995 and 1992, respectively. As a result of
such fee reductions, expenses of Class A and Class B shares of the Fund for
1995 reflect reductions of $0.02 and $0.03 per share, respectively. Absent
such reductions, for 1995, the ratio of expenses to average net assets would
have been 1.79% and 2.53% for Class A and Class B shares, respectively and
the ratio of net investment income to average net assets would have been
(1.01%) and (1.74%) for Class A and Class B shares, respectively. As a
result of such limitations, expenses of the Fund for 1992 reflect reductions
of $0.03 per share. Absent such limitations, for 1992, the ratio of expenses
to average net assets would have been 2.22% and the ratio of net investment
income to average net assets would have been (1.05%).
(c) An estimated total return calculation which takes into consideration fees
and expenses waived or borne by the Adviser during the period shown.
(d) Class B shares commenced operations on January 3, 1994.
(e) Initial price to commence operations.
(f) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charge.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY GLOBAL
TECHNOLOGY FUND ON DECEMBER 31, 1995. IT'S DIVIDED INTO FOUR MAIN CATEGORIES:
COMMON STOCKS, RIGHTS AND WARRANTS, BONDS AND SHORT-TERM INVESTMENTS. THE
STOCKS, RIGHTS AND WARRANTS AND BONDS ARE FURTHER BROKEN DOWN BY INDUSTRY
GROUPS. UNDER EACH INDUSTRY GROUP IS A LIST OF THE SECURITIES OWNED BY THE FUND.
SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED
LAST.
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
COMMON STOCKS
AEROSPACE/DEFENSE (5.70%)
Boeing Co. (The) ........................ 30,000* $ 2,351,250
Raytheon Co. ............................ 80,000* 3,780,000
United Technologies Corp. ............... 50,000* 4,743,750
-----------
10,875,000
-----------
BROADCASTING (0.63%)
Viacom, Inc. (Class B)** ................ 25,152 1,191,576
-----------
COMPUTERS - GRAPHICS (3.56%)
Diamond Multimedia Systems, Inc.** ...... 75,000* 2,690,625
Number Nine Visual Technology Corp.** ... 155,000* 1,356,250
Silicon Graphics, Inc.** ................ 100,000 2,750,000
-----------
6,796,875
-----------
COMPUTERS - MAINFRAME (1.20%)
International Business Machines Corp. ... 25,000* 2,293,750
-----------
COMPUTERS - MEMORY DEVICES (3.78%)
Iomega Corp.** .......................... 75,000* 3,646,875
Seagate Technology, Inc.** .............. 75,000* 3,562,500
-----------
7,209,375
-----------
COMPUTERS - MINI/MICRO (2.10%)
Compaq Computer Corp.** ................. 40,000 1,920,000
Hewelett-Packard Co. .................... 25,000* 2,093,750
-----------
4,013,750
-----------
COMPUTERS - PERIPHERAL (3.18%)
Adaptec, Inc.** ......................... 100,000 4,100,000
Network Appliance, Inc.** ............... 49,200* 1,974,150
-----------
6,074,150
-----------
COMPUTER SERVICES (2.63%)
America Online, Inc.** .................. 85,000* 3,187,500
DataWorks Corp.** ....................... 30,000* 378,750
Software Artistry, Inc.** ............... 25,000* 375,000
Software 2000, Inc.** ................... 53,000* 410,750
Verity, Inc.** .......................... 15,000* 663,750
-----------
5,015,750
-----------
COMPUTERS - SOFTWARE (24.82%)
Baan Co., N.V. (Netherlands)** .......... 5,000* 226,250
Business Objects S.A. American
Depository Receipt, (ADR) (France)**.. 25,000* 1,209,375
Cheyenne Software, Inc.** ............... 150,000 3,918,750
Computer Associates International, Inc... 150,000 8,531,250
Elcom International, Inc.** ............. 50,000* 762,500
GT Interactive Software Corp.** ......... 50,000* 700,000
Hummingbird Communications Ltd.
(Canada)** ........................... 85,000* 3,442,500
Informix Corp.** ........................ 125,000* 3,750,000
Integrated Measurement Systems, Inc.** .. 75,000* 1,106,250
Meta-Software, Inc.** ................... 11,500* 192,625
MetaTools Inc.** ........................ 35,000* 910,000
Novadigm, Inc.** ........................ 130,000* 3,688,750
Oracle Corp.** .......................... 150,000 6,356,250
Parametric Technology Corp.** ........... 60,000 3,990,000
Platinum Technology, Inc.** ............. 125,000* 2,296,875
Symantec Corp.** ........................ 125,000* 2,906,250
Synopsys, Inc.** ........................ 75,000* 2,850,000
SQA, Inc.** ............................. 4,000* 77,000
Telebase Systems, Inc.** (r) ............ 671,860 436,709
-----------
47,351,334
-----------
ELECTRONICS (19.59%)
Applied Materials, Inc.** ............... 220,000 8,662,500
Atmel Corp.** ........................... 50,000* 1,118,750
General Motors Corp. (Class H) .......... 70,000* 3,438,750
Intel Corp. ............................. 50,000* 2,837,500
Lam Research Corp.** .................... 60,000 2,745,000
Loral Corp. ............................. 60,000* 2,122,500
LSI Logic Corp.** ....................... 125,000 4,093,750
National Semiconductor Corp.** .......... 100,000* 2,225,000
Nimbus CD International, Inc.** ......... 20,000* 162,500
Ramtron International Corp.** ........... 214,007* 1,391,045
ROSS Technology, Inc.** ................. 75,000* 731,250
Smartflex Systems, Inc.** ............... 35,000* 621,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
ELECTRONICS (CONTINUED)
Teradyne, Inc.** ..................... 200,000 $ 5,000,000
Tower Semiconductor Ltd. (Israel)** .. 100,000* 2,212,500
------------
37,362,295
------------
MACHINE - DIVERSIFIED (2.73%)
Thermo Electron Corp.** .............. 100,000* 5,200,000
------------
MEDICAL SUPPLIES (0.17%)
CompuMed, Inc.** ..................... 75,000* 318,750
------------
TELECOMMUNICATIONS (12.97%)
3Com Corp.** ......................... 80,000 3,730,000
Bay Networks, Inc.** ................. 112,500* 4,626,563
Cisco Systems, Inc.** ................ 75,000 5,596,875
Harmonic Lightwaves, Inc.** .......... 30,000* 330,000
Global Village Communication** ....... 62,900* 1,218,688
Primus Telecommunications Group,
Inc.**(r) ......................... 50,000* 500,000
Nera AS (ADR) (Norway)** ............. 30,000* 975,000
Newbridge Networks Corp.(Canada)** ... 60,000* 2,482,500
Nokia Corp. (ADR) (Finland) .......... 90,000 3,498,750
Penril Datacomm Networks, Inc.** ..... 150,000* 1,275,000
Worldcomm Systems, Inc.**(r) ......... 37,510* 500,001
------------
24,733,377
------------
TRANSPORTATION (8.08%)
AMR Corp.** .......................... 60,000* 4,455,000
Northwest Airlines Corp. (Class A)**.. 75,000* 3,825,000
UAL Corp.** .......................... 40,000* 7,140,000
------------
15,420,000
------------
TOTAL COMMON STOCKS
(Cost $107,519,167) ( 91.14%) 173,855,982
------- ------------
<CAPTION>
NUMBER OF RIGHTS
OR WARRANTS
----------------
RIGHTS & WARRANTS
BIOMEDICS/GENETICS (0.00%)
Scios-Nova Inc., Warrants**(r) ....... 36,346* 8,748
------------
ELECTRONICS (0.12%)
Ibis Technology Corp., Warrants**..... 70,000 218,750
------------
TOTAL RIGHTS & WARRANTS
(Cost $49,000) (0.12%) 227,498
------- ------------
</TABLE>
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING*** OMITTED) VALUE
- ------------------- -------- --------- --------- ------
<S> <C> <C> <C> <C>
BONDS
AEROSPACE (0.10%)
Aeronca, Inc.
Conv Sub Deb, 01-31-96 ............ 12.500% NR $240* $ 180,000
----------
TELECOMMUNICATIONS (0.22%)
Tele 2000
Conv Note, 04-14-97
(Peru) (R) .......................... 9.750 NR 500 425,000
----------
TRANSPORTATION (0.45%)
Piedmont Aviation Inc.
Equip Tr Cert 1988 Ser F,
03-28-09 .......................... 10.350 BB+ 500* 533,615
Northwest Airlines
Senior Notes, 12-31-00 ............ 12.092 B+ 315* 325,419
----------
859,034
----------
TOTAL BONDS
(Cost $1,495,043) (0.77%) 1,464,034
----- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST (000'S MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- ---- -------- ------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (8.58%)
Investment in a joint repurchase
agreement transaction with
SBC Capital Markets Inc.,
Dated 12-29-95, Due 01-02-96,
(secured by U.S. Treasury Bonds,
7.500% due 11-15-16,
and 10.375%, due 11-15-12)
Note A............................ 5.90% $16,364 $ 16,364,000
------------
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust
Company Daily Interest
Savings Account Current
Rate 5.00%........................ 8,636
------------
TOTAL SHORT-TERM INVESTMENTS ( 8.58%) 16,372,636
------- ------------
TOTAL INVESTMENTS (100.61%) $191,920,150
======= ============
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
(R) This security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold, normally to qualified
institutional buyers, in transactions exempt from registration. See Note A
of the Notes to Financial Statements for valuation policy. Rule 144A
securities amounted to $425,000, as of December 31, 1995.
(r) Direct placement securities are restricted to resale. They have been valued
at fair value by the Trustees after considerations of restrictions as to
resale, financial condition and prospects of the issuer, general market
conditions and pertinent information in accordance with the Fund's By-Laws
and the Investment Company Act of 1940, as amended. The Fund has limited
rights to registration under the Securities Act of 1933 with respect to
these restricted securities.
Additional information on each restricted security is as follows:
<TABLE>
<CAPTION>
MARKET
VALUE AS A
PERCENTAGE MARKET
ACQUISITION ACQUISITION OF FUND'S VALUE AT
SECURITY DATE COST NET ASSETS DECEMBER 31, 1995
- -------- ----------- ----------- ---------- -----------------
<S> <C> <C> <C> <C>
Primus Telecommunications
Group, Inc. -
Common Stock..................... 10-30-95 $500,000 0.26% $500,000
Scios-Nova Inc. - Warrants......... 06-28-91 35,000 0.00 8,748
Telebase Systems, Inc. -
Common Stock..................... 11-14-91 940,604 0.23 436,709
Worldcomm Systems, Inc. -
Common Stock..................... 03-30-95 500,000 0.26 500,001
<FN>
* Securities, other than short-term investments, newly added to the portfolio
during the year ended December 31, 1995.
** Non-income producing security.
*** Credit ratings are unaudited.
NR Not Rated by either Standard & Poor's or Moody's Investors Services.
Parenthetical disclosure of a foreign country in the security description
represents country of 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Technology Series, Inc. ( the "Company") is an open-end investment
company registered under the Investment Company Act of 1940. The Company
consists of one series portfolio: John Hancock Global Technology Fund (the
"Fund"), a diversified series. On July 28, 1995, John Hancock National Aviation
& Technology Fund, which was previously a series portfolio, was merged into the
Fund in a tax-free reorganization. The investment objective of the Fund is to
achieve long-term growth by investing principally in equity securities of
companies that rely extensively on technology in their product development or
operations.
The Directors have authorized the issuance of two classes of shares of the
Fund designated as Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemption, dividends and liquidation except that certain expenses,
subject to the approval of the Directors, 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
which bears distribution/service expenses under the terms of a distribution
plan, have exclusive voting rights to such distribution plan. Significant
accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value. All portfolio
transactions initially expressed in terms of foreign currencies have been
translated into U.S. dollars as described under the heading "Foreign Currency
Translation".
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,
Inc., (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial
Group, may participate in a joint repurchase agreement transaction. Aggregate
cash balances are invested in one or more repurchase agreements, whose
underlying securities are obligations of the U.S. government and/or its
agencies. The Fund's custodian bank receives delivery of the underlying
securities for the joint account on the Fund's behalf. The Adviser is
responsible for ensuring that the agreement is fully collateralized at all
times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale, or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required.
DIVIDENDS, DISTRIBUTIONS AND INTEREST 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 is made aware of 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 all distributions to shareholders from net investment income
and realized gains on the ex-dividend date. Such distributions are determined
in conformity with income tax regulations, which may differ from generally
accepted accounting principles. Dividends paid by the Fund with respect to each
class of shares will be calculated in the same manner, at the same time and
will be in the same amount, except for the effect of expenses that may be
applied differently to each class as explained previously.
EXPENSES Prior to July 28, 1995, the majority of the expenses of the Company
were directly identifiable to an individual Fund. Expenses which were not
readily identifiable to a specific Fund were 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. After July 28, 1995 and the
merger of John Hancock
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
National Aviation & Technology Fund into the Fund, the Fund was the only active
portfolio in the Company. As such, the Fund was responsible for all expenses
incurred which were directly identifiable to the Fund and the Company.
ESTIMATES The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees if any, are calculated daily at the class level based
on the appropriate net assets of each class and the specific expense rate(s)
applicable to each class.
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially expressed in
terms of foreign currencies are translated into U.S. dollars based on London
currency exchange quotations as of 5:00 p.m., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain/(loss) on investments are
translated at the rates prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at fiscal
year end, resulting from changes in the exchange rate.
OPTIONS Listed options will be valued at the last quoted sales price on the
exchange on which they are primarily traded. Purchased put or call
over-the-counter options will be valued at the average of the "bid" prices
obtained from two independent brokers. Written put or call over-the-counter
options will be valued at the average of the "asked" prices obtained from two
independent brokers. Upon the writing of a call or put option, an amount equal
to the premium received by the Fund will be included in the Statement of Assets
and Liabilities as an asset and corresponding liability. The amount of the
liability will be subsequently marked-to-market to reflect the current market
value of the written option.
The Fund may use option contracts to manage its exposure to the stock market.
Writing puts and buying calls will tend to increase the Fund's exposure to the
underlying instrument and buying puts and writing calls will tend to decrease
the Fund's exposure to the underlying instrument, or hedge other Fund
investments.
The maximum exposure to loss for any purchased options will be limited to the
premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value will reflect the maximum exposure
of the Fund in these contracts, but the actual exposure will be limited to the
change in value of the contract over the period the contract remains open.
Risks may also arise if counterparties do not perform under the contract's
terms, or if the Fund is unable to offset a contract with a counterparty on a
timely basis ("liquidity risk"). Exchange-traded options have minimal credit
risk as the exchanges act as counterparties to each transaction, and only
present liquidity risk in highly unusual market conditions. To minimize credit
and liquidity risks in over-the-counter option contracts, the Fund will
continuously monitor the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit risk
may involve amounts in excess of those reflected in the Fund's period-end
Statement of Assets and Liabilities.
There were no written option transactions for the period ended December 31,
1995.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
DISCOUNT ON SECURITIES The Fund accretes discount from par value on investment
securities from either the date of issue or date of purchase over the life of
the security, as required by the Internal Revenue Code.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
The Adviser is responsible for managing the Fund's investment business affairs
and overseeing the investment activities of the sub-adviser. The Adviser has a
sub-investment management contract with American Fund Advisors, Inc. (the
"Sub-Adviser"), under which the Sub-Adviser, subject to the review of the
Directors and the overall supervision of the Adviser, provides the Fund with
investment services and advice with respect to investment transactions. Under
the present investment management contract, for the period ended December 31,
1995, the Fund paid a monthly management fee to the Adviser, equivalent on an
annual basis, to the sum of (a) 1.00% of the first $100,000,000 of the Fund's
average daily net asset value and (b) 0.75% of the Fund's average daily net
asset value in excess of $100,000,000. Effective January 1, 1995, the Adviser
waived a portion of the management fee amounting to 0.15% of the average daily
net asset value of the first $100,000,000 of each series of the Fund. Therefore,
the Fund paid a monthly management fee to the Adviser, equivalent on an annual
basis, to the sum of 0.85% of the first $100,000,000 of the Fund's average daily
net asset value. The Adviser pays the Sub-Adviser a monthly management fee,
equivalent on an annual basis, to the sum of (a) 0.40% of the first $100,000,000
of the Fund's average daily net asset value and (b) 40% of the investment
advisory fee received by the Adviser on amounts over $100,000,000. The Fund pays
a monthly administrative fee at the rate of $100,000 per annum to the Adviser
for performance of administrative services to the Fund.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive state
limit where the Fund is registered to sell shares, the fee payable to the
Adviser will be reduced to the extent of such excess, and the Adviser will make
additional arrangements necessary to eliminate any remaining excess expenses.
The current limits are 2.5% of the first $30,000,000 of the Fund's average daily
net asset value, 2.0% of the next $70,000,000, and 1.5% of the remaining average
daily net asset value.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1, 1995, JH
Funds was known as John Hancock Broker Distribution Services, Inc. For the
period ended December 31, 1995, net sales charges received with regard to sales
of Class A shares amounted to $584,203. Out of this amount, $90,191 was retained
and used for printing prospectuses, advertising, sales literature and other
purposes, $162,066 was paid as sales commissions and first year service fees to
unrelated broker-dealers and $331,946 was paid as sales commissions and first
year service fees to sales personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro &
Co., Inc. ("Sutro"), all of which are broker dealers. The Adviser's indirect
parent, John Hancock Mutual Life Insurance Company, is the indirect sole
shareholder of Distributors and John Hancock Freedom Securities Corporation and
its subsidiaries which include Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase are subject to
a contingent deferred sales charge ("CDSC") at declining rates beginning at 5.0%
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 CDSC are
paid to JH Funds and are used in whole or in part to defray its expenses related
to providing distribution related services to the Fund in connection with the
sale of Class B shares. For the period ended December 31, 1995 contingent
deferred sales charges received by JH Funds amounted to $92,883.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund makes payments to JH Funds, for
distribution and service expenses at an annual rate not to exceed 0.30% of Class
A average daily
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
net assets and 1.00% of Class B average daily net assets to reimburse JH Funds
for its distribution/service costs. Up to a maximum of 0.25% of such payments
may be service fees as defined by the amended Rules of Fair Practice of the
National Association of Securities Dealers which became effective July 7, 1993.
Under the amended Rules of Fair Practice, curtailment of a portion of the Fund's
12b-1 payments could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Investor Services
Corporation ("Investor Services"), a wholly-owned subsidiary of The Berkeley
Financial Group. Prior to January 1, 1995, JH Investor Services was known as
John Hancock Funds Services, Inc. For the period January 1, 1995 to September
30, 1995, Class A and Class B shares paid transfer agent fees based on the
number of shareholder accounts and certain out-of-pocket expenses. For the nine
months ended September 30, 1995, the transfer agent expense, calculated as a
class specific expense was $287,188 for Class A shares and $74,216 for Class B
shares, respectively. Effective October 1, 1995 transfer agent expense is being
treated as a fund expense based on the number of shareholder accounts in the
Fund and certain out-of-pocket expenses.
Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser, and Mr.
Barry J. Gordon is a director and officer of the Sub-Adviser. Mr. Thomas W.L.
Cameron is an affiliated Director of the Fund. The compensation of unaffiliated
Directors is borne by the Fund. Effective with the fees paid for 1995, the
unaffiliated Directors may elect to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund will make 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 will be recorded on the books as an other
asset. The deferred compensation liability and the investment to cover the
liability will be marked to market on a periodic basis and income earned by the
investment will be recorded on the Fund's books.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended December 31, 1995, aggregated $101,693,163 and $83,447,655, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended December 31, 1995.
The cost of investments owned (including the joint repurchase agreement) at
December 31, 1995 for Federal income tax purposes was $125,427,210. Gross
unrealized appreciation and depreciation of investments aggregated $74,114,649
and $7,630,345, respectively, resulting in net unrealized appreciation of
$66,484,304.
NOTE D --
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended December 31, 1995, the Fund has reclassified amounts to
reflect a decrease in accumulated net investment loss of $1,309,629, a decrease
in accumulated net realized gain on investments of $1,309,775 and an increase in
capital paid-in of $146. This represents the cumulative amount necessary to
report these balances on a tax basis, excluding certain temporary differences,
as of December 31, 1995. Additional adjustments may be needed in subsequent
reporting periods. These reclassifications, which have no impact on the net
asset value of the Fund, are primarily attributable to certain differences in
the computation of distributable income and capital gains under federal tax
rules versus generally accepted accounting principles.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
NOTE E --
REORGANIZATION
On July 19, 1995, the shareholders of John Hancock National Aviation &
Technology Fund (JHNA&T) approved a plan of reorganization between JHNA&T and
the Fund providing for the transfer of substantially all of the assets and
liabilities of JHNA&T to the Fund in exchange solely for Class A and Class B
shares of the Fund. The acquisition was accounted for as a tax free exchange of
2,736,868 Class A shares, and 21,055 Class B shares of John Hancock Global
Technology Fund for the net assets of JHNA&T, which amounted to $75,930,600 and
$576,404 for Class A and Class B shares, respectively, including $41,806,567 of
unrealized appreciation, after the close of business at July 28, 1995. The
aggregate net assets of the Fund and JHNA&T immediately before the acquisition
were $117,123,530 and $76,507,004, respectively. The aggregate net assets of the
Fund and JHNA&T immediately after the merger were $193,630,533.
20
<PAGE> 21
John Hancock Funds - Global Technology Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock Global Technology Fund
and the Directors of John Hancock Technology Series, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments (except S&P credit ratings), and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
John Hancock Global Technology Fund (the "Fund") (a portfolio of John Hancock
Technology Series, Inc.) at December 31, 1995, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
February 7, 1996
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the distributions of the Fund for its fiscal year ended December 31,
1995.
With respect to the Fund's ordinary taxable income for the fiscal year ended
December 31, 1995, none of the dividends qualify for the corporate dividends
received deduction.
The Fund designated distributions to shareholders of $7,836,100 as long-term
capital dividends. Shareholders were mailed a 1995 U.S. Treasury Department Form
1099-DIV in January 1996 representing their proportionate share.
United States Government Obligations: The Fund did not have any assets
invested in U.S. Treasury bonds, bills, and notes or other U.S. government
agencies at year end. The Fund did not derive any income from these investments.
For specific information on exemption provisions in your state, consult your
local tax office or your tax adviser.
SHAREHOLDER VOTES (UNAUDITED)
On July 28, 1995, the shareholders of John Hancock National Aviation &
Technology Fund ("JHNA&T") approved a plan of reorganization between JHNA&T and
the Fund. The shareholder votes tallied were 4,452,157 FOR, 250,074 AGAINST and
112,537 ABSTAINING.
21
<PAGE> 22
NOTES
John Hancock Funds - Global Technology Fund
22
<PAGE> 23
NOTES
John Hancock Funds - Global Technology Fund
23
<PAGE> 24
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FIRM U.S. Postage
101 Huntington Avenue Boston, MA 02199-7603 PAID
Brockton, MA
Permit No. 582
[A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."]
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock Global
Technology Fund. It may be used as sales literature when preceded or accompanied
by the current prospectus, which details charges, investment objectives and
operating policies.
[A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."]
JHD 8300A 12/95
2/96
