JOHN HANCOCK
International/
Global Funds
[LOGO]
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Prospectus
June 1, 1998*
This prospectus gives vital information about these funds. For your own benefit
and protection, please read it before you invest, and keep it on hand for future
reference.
Please note that these funds:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed to achieve their goal(s)
Short-Term Strategic Income Fund may invest up to 67% in junk bonds; read risk
information carefully.
Like all mutual fund shares, these securities have not been approved or
disapproved by the Securities and Exchange Commission or any state securities
commission, nor has the Securities and Exchange Commission or any state
securities commission passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
*March 1, 1998 for European Equity Fund, Global Rx Fund, Global Technology Fund
and Pacific Basin Equities Fund.
Growth
European Equity Fund
Global Fund
Global Rx Fund
Global Technology Fund
International Fund
Pacific Basin Equities Fund
Income
Short-Term Strategic Income Fund
World Bond Fund
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
101 Huntington Avenue, Boston, Massachusetts 02199-7603
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Contents
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A fund-by-fund look at o Growth
goals, strategies,
risks, expenses and European Equity Fund 4
financial history. Global Fund 6
Global Rx Fund 8
Global Technology Fund 10
International Fund 12
Pacific Basin Equities Fund 14
o Income
Short-Term Strategic Income Fund 16
World Bond Fund 18
Policies and instructions Your account
for opening, maintaining
and closing an account in any Choosing a share class 20
international/global fund. How sales charges are calculated 20
Sales charge reductions and waivers 21
Opening an account 22
Buying shares 23
Selling shares 24
Transaction policies 26
Dividends and account policies 26
Additional investor services 27
Details that apply to the Fund details
international/global funds
as a group. Business structure 28
Sales compensation 29
More about risk 31
For more information back cover
<PAGE>
Overview
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FUND INFORMATION KEY
Concise fund-by-fund descriptions begin on the next page. Each description
provides the following information:
[Clip Art] Goal and strategy The fund's particular investment goals and the
strategies it intends to use in pursuing those goals.
[Clip Art] Portfolio securities The primary types of securities in which the
fund invests. Secondary investments are described in "More about risk" at the
end of the prospectus.
[Clip Art] Risk factors The major risk factors associated with the fund.
[Clip Art] Portfolio management The individual or group (including subadvisers,
if any) designated by the investment adviser to handle the fund's day-to-day
management.
[Clip Art] Expenses The overall costs borne by an investor in the fund,
including sales charges and annual expenses.
[Clip Art] Financial highlights A table showing the fund's financial performance
for up to ten years, by share class. A bar chart showing total return allows you
to compare the fund's historical risk level to those of other funds.
GOAL OF THE INTERNATIONAL/GLOBAL FUNDS
John Hancock international/global funds invest in foreign and U.S. securities.
Most of the funds invest primarily in stocks and seek long-term growth of
capital. Two funds invest primarily in bonds and seek current income or maximum
total return. Each fund has its own strategy and own risk/reward profile.
Because you could lose money by investing in these funds, be sure to read all
risk disclosure carefully before investing.
WHO MAY WANT TO INVEST
These funds may be appropriate for investors who:
o are seeking to diversify a portfolio of domestic investments
o are seeking access to markets that can be less accessible to individual
investors
o are seeking funds for the growth or income portion of an asset allocation
portfolio
o are investing for goals that are many years in the future
International/global funds may NOT be appropriate if you:
o are investing with a shorter time horizon in mind
o are uncomfortable with an investment whose value may vary substantially
o want to limit your exposure to foreign securities
THE MANAGEMENT FIRM
All John Hancock international/global funds are managed by John Hancock
Advisers, Inc. Founded in 1968, John Hancock Advisers is a wholly owned
subsidiary of John Hancock Mutual Life Insurance Company and manages more than
$30 billion in assets.
<PAGE>
European Equity Fund
REGISTRANT NAME:
JOHN HANCOCK WORLD FUND TICKER SYMBOL CLASS A: N/A CLASS B: N/A
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GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital. To pursue this goal, the
fund invests primarily in stocks of European companies. Under normal
circumstances, the fund invests at least 80% of assets in companies that earn
more than half of their revenue from European operations, are organized under
European law or are principally traded on European stock exchanges.
The fund has not established limitations on the allocation of investments among
the European countries. However, the fund will invest principally in countries
with established economies and securities markets.
The fund may also invest in stocks of European companies that are traded on
emerging market stock exchanges.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in common stock, warrants and convertible
securities. The fund may also invest in investment-grade debt securities issued
by European or U.S. companies and governments.
For liquidity and flexibility, the fund may place up to 20% of assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest up to 100% in these securities as a defensive tactic. The fund also may
invest in certain higher-risk securities and engage in other investment
practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Because the fund concentrates on one
region, investors should expect above-average volatility.
Also, because the fund invests internationally, it carries additional risks,
including currency, natural event, information and political risks. These risks,
which may make the fund more volatile than a comparable domestic growth fund,
are described in "More about risk" starting on page 31. The risks of
international investing may be higher in emerging markets, a category that
includes some European countries.
To the extent that the fund utilizes higher-risk securities and practices, it
takes on further risks that could adversely affect its performance. Please read
"More about risk" carefully before investing.
MANAGEMENT/SUBADVISER
[Clip Art] Under the supervision of John Hancock Advisers, Inc., a team of
portfolio managers at Indocam International Investment Services, the fund's
subadviser, is responsible for the fund's day-to-day investment management.
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INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show estimated expenses for the fiscal year ending October 31,
1998. Actual expenses may be greater or less.
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Shareholder transaction expenses Class A Class B
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Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
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Annual fund operating expenses (as a % of average net assets)
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Management fee (after expense limitation)(3) 0.81% 0.81%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.79% 0.79%
Total fund operating expenses (after limitation)(3) 1.90% 2.60%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
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Share class Year 1 Year 3 Year 5 Year 10
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Class A shares $68 $107 $148 $261
Class B shares
Assuming redemption
at end of period $76 $111 $158 $276
Assuming no redemption $26 $81 $138 $276
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Reflects the adviser's agreement to limit expenses. Without this
limitation, management fees would be 0.90% for each class and total fund
operating expenses would be 1.99% for Class A and 2.69% for Class B. The
adviser may terminate this limitation in the future.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
4 GROWTH - EUROPEAN EQUITY FUND
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FINANCIAL HIGHLIGHTS
[Clip Art] The figures below cover the period from the commencement of
operations on March 2, 1998 to April 30, 1998 for Class A shares. These figures
are unaudited.
[The following table was represented by a bar graph in the printed materials.]
Volatility, as indicated by Class A 7.10(4)
year-by-year total investment return (%) two
(scale varies from fund to fund) months
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Class A - period ended: 4/98(1)
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Per share operating performance
Net asset value, beginning of period $10.00
Net investment income(2) 0.01
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.70
Total from investment operations 0.71
Net asset value, end of period $10.71
Total investment return at net asset value(3)(%) 7.10(4)
Total adjusted investment return at net asset value(3,5)(%) 6.79(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 3,478
Ratio of expenses to average net assets (%) 1.90(6)
Ratio of adjusted expenses to average net assets(7)(%) 3.83(6)
Ratio of net investment income to average net assets (%) 0.49(6)
Ratio of adjusted net investment (loss) to
average net assets(7)(%) (1.44)(6)
Portfolio turnover rate (%) 4
Fee reduction per share(2)($) 0.03
Average brokerage commission rate ($) 0.0239
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Class B - period ended: 4/98(1)
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Per share operating performance
Net asset value, beginning of period --
Net investment income --
Net realized and unrealized gain (loss) on
investments and foreign currency transactions --
Total from investment operations --
Net asset value, end of period --
Total investment return at net asset value (%) --
Total adjusted investment return at net asset value (%) --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) --
Ratio of expenses to average net assets (%) --
Ratio of adjusted expenses to average net assets (%) --
Ratio of net investment income to average net assets (%) --
Ratio of adjusted net investment income to
average net assets (%) --
Portfolio turnover rate (%) --
Fee reduction per share ($) --
Average brokerage commission rate ($) --
(1) Class A shares commenced operations on March 2, 1998. There were no Class B
shares outstanding during the period ended April 30, 1998.
(2) Based on the average of shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
GROWTH - EUROPEAN EQUITY FUND 5
<PAGE>
Global Fund
REGISTRANT NAME:
JOHN HANCOCK INVESTMENT TRUST III TICKER SYMBOL CLASS A: JHGAX CLASS B: FGLOX
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GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital. To pursue this goal, the
fund invests primarily in common stocks of foreign and U.S. companies. The fund
maintains a diversified portfolio of company and government securities from
around the world. Under normal circumstances, the fund expects to invest in the
securities markets of at least three countries at any one time, potentially
including the U.S.
The fund does not maintain a fixed allocation of assets, either with respect to
securities type or to geography.
PORTFOLIO SECURITIES
[Clip Art] Under normal circumstances, the fund invests at least 65% of assets
in common stocks and convertible securities, but may invest in virtually any
type of security, foreign or domestic, including preferred and convertible
securities, warrants and investment-grade debt securities. Not counting
short-term securities, the fund generally expects that no more than 5% of assets
will be invested in debt securities.
For liquidity and flexibility, the fund may place up to 35% of assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest up to 100% in these securities as a defensive tactic. The fund also may
invest in certain higher-risk securities, and may engage in other investment
practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements.
Because it invests internationally, the fund carries additional risks, including
currency, information, natural event and political risks. These risks, which may
make the fund more volatile than a comparable domestic growth fund, are defined
in "More about risk" starting on page 31. The risks of international investing
are higher in emerging markets such as those of Latin America, Southeast Asia
and Eastern Europe.
To the extent that the fund utilizes higher-risk securities and practices, it
takes on further risks that could adversely affect its performance. Please read
"More about risk" carefully before investing.
MANAGEMENT/SUBADVISER
[Clip Art] Miren Etcheverry, John L.F. Wills, and Gerardo J. Espinoza lead the
portfolio management team. Ms. Etcheverry and Mr. Espinoza are senior vice
presidents and joined John Hancock Funds in December 1996, having been in the
investment business since 1978 and 1979, respectively. Mr. Wills is a senior
vice president of the adviser and managing director of the subadviser, John
Hancock Advisers International Limited. He joined John Hancock Funds in 1987 and
has been in the investment business since 1969.
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INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Future expenses may be greater or less.
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Shareholder transaction expenses Class A Class B
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Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
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Annual fund operating expenses (as a % of average net assets)
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Management fee(3) 0.88% 0.88%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.56% 0.56%
Total fund operating expenses 1.74% 2.44%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
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Share class Year 1 Year 3 Year 5 Year 10
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Class A shares $67 $102 $140 $245
Class B shares
Assuming redemption
at end of period $75 $106 $150 $260
Assuming no redemption $25 $76 $130 $260
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Includes a subadviser fee equal to 0.70% of the fund's net assets.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
6 GROWTH - GLOBAL FUND
<PAGE>
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FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Price Waterhouse LLP.
[The following table was represented by a bar graph in the printed materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class B
year-by-year total investment return (%) 7.05 30.22 (10.42) 14.04 (3.85) 34.95 7.97 (1.01) 9.10 8.67
(scale varies from fund to fund)
</TABLE>
<TABLE>
<CAPTION>
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Class A - period ended: 10/92(1) 10/93 10/94 10/95 10/96 10/97
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<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $11.31 $10.55 $14.30 $14.16 $12.67 $12.97
Net investment income (loss)(2) (0.04) (0.10) (0.07) (0.03) (0.02) (0.05)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (0.72) 3.85 1.24 (0.13) 1.20 1.21
Total from investment operations (0.76) 3.75 1.17 (0.16) 1.18 1.16
Less distributions:
Distributions from net realized gain on investments
sold and foreign currency transactions -- -- (1.31) (1.33) (0.88) (1.19)
Net asset value, end of period $10.55 $14.30 $14.16 $12.67 $12.97 $12.94
Total investment return at net asset value(3) (%) (6.72)(4) 35.55 8.64 (0.37) 9.87 9.36
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 76,980 90,787 100,973 93,597 94,746 92,127
Ratio of expenses to average net assets (%) 2.47(5) 2.12 1.98 1.87 1.88 1.81(6)
Ratio of net investment income (loss) to average
net assets (%) (0.60)(5) (0.86) (0.54) (0.23) (0.19) (0.36)
Portfolio turnover rate (%) 69 108 61 60 98 81
Average brokerage commission rate(7) ($) N/A N/A N/A N/A 0.0221 0.0216
<CAPTION>
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Class B - period ended: 10/88 10/89 10/90 10/91 10/92 10/93
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<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $10.42 $10.67 $13.58 $9.94 $10.92 $10.50
Net investment income (loss) 0.01 (0.10) (0.02) (0.01)(2) (0.12)(2) (0.15)(2)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.69 3.25 (1.12) 1.35 (0.30) 3.82
Total from investment operations 0.70 3.15 (1.14) 1.34 (0.42) 3.67
Less distributions:
Distributions from net investment income -- (0.01) -- -- -- --
Distributions from net realized gain on investments
sold and foreign currency transactions (0.45) (0.23) (2.50) (0.36) -- --
Total distributions (0.45) (0.24) (2.50) (0.36) -- --
Net asset value, end of period $10.67 $13.58 $9.94 $10.92 $10.50 $14.17
Total investment return at net asset value(3) (%) 7.05 30.22 (10.42) 14.04 (3.85) 34.95
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 34,380 35,596 33,281 28,686 11,475 19,340
Ratio of expenses to average net assets (%) 2.55 2.30 2.46 2.60 2.68 2.49
Ratio of net investment income (loss) to average
net assets (%) 0.09 (0.47) (0.59) (0.12) (1.03) (1.25)
Portfolio turnover rate (%) 142 138 58 106 69 108
Average brokerage commission rate(7) ($) N/A N/A N/A N/A N/A N/A
<CAPTION>
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Class B - period ended: 10/94 10/95 10/96 10/97
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<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $14.17 $13.93 $12.36 $12.54
Net investment income (loss) (0.15)(2) (0.11)(2) (0.10)(2) (0.14)(2)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 1.22 (0.13) 1.16 1.18
Total from investment operations 1.07 (0.24) 1.06 1.04
Less distributions:
Distributions from net investment income -- -- -- --
Distributions from net realized gain on investments
sold and foreign currency transactions (1.31) (1.33) (0.88) (1.19)
Total distributions (1.31) (1.33) (0.88) (1.19)
Net asset value, end of period $13.93 $12.36 $12.54 $12.39
Total investment return at net asset value(3) (%) 7.97 (1.01) 9.10 8.67
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 31,822 24,570 27,599 28,007
Ratio of expenses to average net assets (%) 2.59 2.57 2.54 2.49(6)
Ratio of net investment income (loss) to average
net assets (%) (1.12) (0.89) (0.83) (1.04)
Portfolio turnover rate (%) 61 60 98 81
Average brokerage commission rate(7) ($) N/A N/A 0.0221 0.0216
</TABLE>
(1) Class A shares commenced operations on January 3, 1992.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) Annualized.
(6) Expense ratios do not include interest expense due to bank loans, which
amounted to less than $0.01 per share.
(7) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
GROWTH - GLOBAL FUND 7
<PAGE>
Global Rx Fund
REGISTRANT NAME: JOHN HANCOCK WORLD FUND
TICKER SYMBOL CLASS A: JHGRX CLASS B: JHRBX
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GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital. To pursue this goal, the
fund invests primarily in stocks of foreign and U.S. health care companies. The
fund defines health care companies as those deriving at least half of their
gross revenues, or committing at least half of their gross assets, to health
care-related activities. Under normal circumstances, the fund invests at least
65% of assets in these companies, including small- and medium-sized companies.
The fund expects to invest in the securities markets of at least three countries
at any one time, potentially including the U.S. Because the fund is
non-diversified, it may invest more than 5% of assets in securities of a single
issuer.
The fund has an independent advisory board composed of scientific and medical
experts to provide advice and consultation on health care developments.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in foreign and domestic common stocks, and
may invest in warrants, preferred stocks and convertible debt securities.
For liquidity and flexibility, the fund may place up to 35% of assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest up to 100% in these securities as a defensive tactic. The fund also may
invest in certain higher-risk securities, and may engage in other investment
practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Because the fund concentrates on a single
sector (health care), and because this sector has historically been volatile,
investors should expect above-average volatility.
Also, because the fund invests internationally, it carries additional risks,
including currency, information, natural event and political risks. These risks,
which may make the fund more volatile than a comparable domestic growth fund,
are defined in "More about risk" starting on page 31.
To the extent that the fund invests in smaller-capitalization companies or
utilizes higher-risk securities and practices, it takes on further risks that
could adversely affect its performance. Please read "More about risk" carefully
before investing.
PORTFOLIO MANAGEMENT
[Clip Art] Linda I. Miller, CFA, leader of the fund's portfolio management team
since January 1996, is a vice president of the adviser. She joined John Hancock
Funds in November 1995 and has been in the investment business with a focus on
the health care industry since 1980.
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INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Future expenses may be greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B
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Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
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Annual fund operating expenses (as a % of average net assets)
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Management fee 0.80% 0.80%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.58% 0.58%
Total fund operating expenses 1.68% 2.38%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
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Share class Year 1 Year 3 Year 5 Year 10
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Class A shares $66 $100 $137 $239
Class B shares
Assuming redemption
at end of period $74 $104 $147 $254
Assuming no redemption $24 $74 $127 $254
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
8 GROWTH - GLOBAL RX FUND
<PAGE>
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FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Price Waterhouse LLP.
[The following table was represented as a bar graph in the printed materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class A
year-by-year total investment return (%) 33.40(5) 0.30 23.39 30.89 18.39 (1.26)(5) 26.63
(scale varies from fund to fund) two months
</TABLE>
<TABLE>
<CAPTION>
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Class A - period ended: 8/92(1) 8/93 8/94 8/95
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<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $10.00 $13.34 $13.38 $16.51
Net investment income (loss) (0.03) (0.23) (0.32) (0.36)(3)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 3.37 0.27 3.45 5.46
Total from investment operations 3.34 0.04 3.13 5.10
Less distributions:
Distributions from net realized gain on investments sold and
foreign currency transactions -- -- -- --
Net asset value, end of period $13.34 $13.38 $16.51 $21.61
Total investment return at net asset value(4) (%) 33.40(5) 0.30 23.39 30.89
Total adjusted investment return at net asset value(4,6) (%) 32.11(5) 0.04 -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 14,702 15,647 18,643 24,394
Ratio of expenses to average net assets (%) 1.98(7) 2.50 2.55 2.56
Ratio of adjusted expenses to average net assets(8) (%) 3.39(7) 2.76 -- --
Ratio of net investment income (loss) to average net assets (%) (0.51)(7) (1.67) (2.01) (1.99)
Ratio of adjusted net investment income (loss) to average
net assets(8) (%) (1.92)(7) (1.93) -- --
Portfolio turnover rate (%) 48 93 52 38
Fee reduction per share ($) 0.085 0.035 -- --
Average brokerage commission rate(9) ($) N/A N/A N/A N/A
<CAPTION>
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Class A - period ended: 8/96 10/96(2) 10/97
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<S> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $21.61 $25.43 $25.11
Net investment income (loss) (0.19)(3) (0.05)(3) (0.19)(3)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 4.15 (0.27) 6.56
Total from investment operations 3.96 (0.32) 6.37
Less distributions:
Distributions from net realized gain on investments sold and
foreign currency transactions (0.14) -- (1.23)
Net asset value, end of period $25.43 $25.11 $30.25
Total investment return at net asset value(4) (%) 18.39 (1.26)(5) 26.63
Total adjusted investment return at net asset value(4,6) (%) -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 42,405 42,618 53,122
Ratio of expenses to average net assets (%) 1.80 1.92(7) 1.68
Ratio of adjusted expenses to average net assets(8) (%) -- -- --
Ratio of net investment income (loss) to average net assets (%) (0.75) (1.04)(7) (0.71)
Ratio of adjusted net investment income (loss) to average
net assets(8) (%) -- -- --
Portfolio turnover rate (%) 68 24 57
Fee reduction per share ($) -- -- --
Average brokerage commission rate(9) ($) 0.0181 0.0726 0.0749
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 8/94(1) 8/95 8/96 10/96(2) 10/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $17.29 $16.46 $21.35 $24.94 $24.60
Net investment income (loss)(3) (0.17) (0.55) (0.34) (0.08) (0.37)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.66) 5.44 4.07 (0.26) 6.40
Total from investment operations (0.83) 4.89 3.73 (0.34) 6.03
Less distributions:
Distributions from net realized gain on investments sold and
foreign currency transactions -- -- (0.14) -- (1.23)
Net asset value, end of period $16.46 $21.35 $24.94 $24.60 $29.40
Total investment return at net asset value(4) (%) (4.80)(5) 29.71 17.53 (1.36)(5) 25.76
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 1,071 6,333 36,591 37,521 53,436
Ratio of expenses to average net assets (%) 3.34(7) 3.45 2.42 2.62(7) 2.38
Ratio of net investment income (loss) to average net assets (%) (2.65)(7) (2.91) (1.33) (1.74)(7) (1.41)
Portfolio turnover rate (%) 52 38 68 24 57
Average brokerage commission rate(9) ($) N/A N/A 0.0181 0.0726 0.0749
</TABLE>
(1) Class A and Class B shares commenced operations on October 1, 1991 and
March 7, 1994, respectively.
(2) Effective October 31, 1996, the fiscal year end changed from August 31 to
October 31.
(3) Based on the average of the shares outstanding at the end of each month.
(4) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(5) Not annualized.
(6) An estimated total return calculation that does not take into
consideration fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
(9) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
GROWTH - GLOBAL RX FUND 9
<PAGE>
Global Technology Fund
REGISTRANT NAME: JOHN HANCOCK SERIES TRUST
TICKER SYMBOL CLASS A: NTTFX CLASS B: FGTBX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital. To pursue this goal, the
fund invests primarily in stocks of foreign and U.S. companies that rely
extensively on technology in their product development or operations. Under
normal circumstances, the fund invests at least 65% of assets in these
companies, and expects to invest in the securities markets of at least three
countries at any one time, potentially including the U.S. Income is a secondary
goal.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in foreign and domestic common stocks, and
may invest in warrants, preferred stocks and convertible debt securities. The
fund may invest up to 10% of assets in debt securities of any maturity. These
may include securities rated as low as CC/Ca and their unrated equivalents.
Bonds rated lower than BBB/Baa are considered junk bonds.
For liquidity and flexibility, the fund may place up to 35% of assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest up to 100% in these securities as a defensive tactic. The fund also may
invest in certain higher-risk securities, including restricted securities, and
may engage in other investment practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Because the fund concentrates on a single
sector (technology), and because this sector has historically been volatile,
investors should expect above-average volatility.
Also, because the fund invests internationally, it carries additional risks,
including currency, information, natural event and political risks. These risks,
which may make the fund more volatile than a comparable domestic growth fund,
are defined in "More about risk" starting on page 31. The risks of international
investing are higher in emerging markets such as those of Latin America, Asia
and Eastern Europe. To the extent that the fund invests in
smaller-capitalization companies or junk bonds, it further increases the chances
for fluctuations in share price and total return. Please read "More about risk"
carefully before investing.
MANAGEMENT/SUBADVISER
[Clip Art] Barry J. Gordon and Marc H. Klee lead the fund's management team, as
they have since the fund's inception in 1983. They are principals of American
Fund Advisors, Inc. (AFA), which was the fund's adviser until 1991. Since 1991,
AFA has been the fund's subadviser.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Future expenses may be greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B
- --------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee(3) 0.79% 0.79%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.42% 0.42%
Total fund operating expenses 1.51% 2.21%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $65 $95 $128 $221
Class B shares
Assuming redemption
at end of period $72 $99 $138 $237
Assuming no redemption $22 $69 $118 $237
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Includes a subadviser fee that will not exceed 0.35% of the fund's net
assets.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
10 GROWTH - GLOBAL TECHNOLOGY FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below for the one-year period ended October 31, 1997 have
been audited by the fund's independent auditors, Ernst & Young LLP. Figures for
previous years were audited by another independent auditor.
[The following table was represented as a bar graph in the printed materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class A
year-by-year total investment return (%) 2.84 10.48 16.61 (18.46) 33.05 5.70 32.06 9.62 46.53 5.22(4) 21.90
(scale varies from fund to fund) ten months
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 12/87 12/88 12/89 12/90 12/91 12/92
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $13.80 $13.98 $15.31 $16.93 $12.44 $15.60
Net investment income (loss) 0.15 0.15 0.10 (0.04) 0.05 (0.15)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.26 1.32 2.43 (3.09) 4.11 1.00
Total from investment operations 0.41 1.47 2.53 (3.13) 4.16 0.85
Less distributions:
Dividends from net investment income (0.23) (0.14) (0.13) -- (0.04) --
Distributions from net realized gain on
investments and foreign currency transactions -- -- (0.78) (1.36) (0.96) (1.51)
Total distributions (0.23) (0.14) (0.91) (1.36) (1.00) (1.51)
Net asset value, end of period $13.98 $15.31 $16.93 $12.44 $15.60 $14.94
Total investment return at net asset value(3) (%) 2.84 10.48 16.61 (18.46) 33.05 5.70
Total adjusted investment return at net asset value(3,5) -- -- -- -- -- 5.53
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 44,224 38,594 40,341 28,864 31,580 32,094
Ratio of expenses to average net assets (%) 1.63 1.75 1.90 2.36 2.32 2.05
Ratio of adjusted expenses to average net assets(7) (%) -- -- -- -- -- 2.22
Ratio of net investment income (loss) to average
net assets (%) 0.75 0.89 0.60 (0.28) 0.34 (0.88)
Ratio of adjusted net investment income (loss) to
average net assets(7) (%) -- -- -- -- -- (1.05)
Portfolio turnover rate (%) 9 12 30 38 67 76
Fee reduction per share ($) -- -- -- -- -- 0.03
Average brokerage commission rate(8) ($) N/A N/A N/A N/A N/A N/A
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 12/93 12/94 12/95 10/96(1) 10/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $14.94 $17.45 $17.84 $24.51 $25.79
Net investment income (loss) (0.21) (0.22)(2) (0.22)(2) (0.14)(2) (0.27)(2)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 4.92 1.87 8.53 1.42 5.76
Total from investment operations 4.71 1.65 8.31 1.28 5.49
Less distributions:
Dividends from net investment income -- -- -- -- --
Distributions from net realized gain on
investments and foreign currency transactions (2.20) (1.26) (1.64) -- (1.23)
Total distributions (2.20) (1.26) (1.64) -- (1.23)
Net asset value, end of period $17.45 $17.84 $24.51 $25.79 $30.05
Total investment return at net asset value(3) (%) 32.06 9.62 46.53 5.22(4) 21.90
Total adjusted investment return at net asset value(3,5) -- -- 46.41 -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 41,749 52,193 155,001 166,010 184,048
Ratio of expenses to average net assets (%) 2.10 2.16 1.67 1.57(6) 1.51
Ratio of adjusted expenses to average net assets(7) (%) -- -- 1.79 -- --
Ratio of net investment income (loss) to average
net assets (%) (1.49) (1.25) (0.89) (0.68)(6) (0.95)
Ratio of adjusted net investment income (loss) to
average net assets(7) (%) -- -- (1.01) -- --
Portfolio turnover rate (%) 86 67 70 64 104
Fee reduction per share ($) -- -- 0.02(2) -- --
Average brokerage commission rate(8) ($) N/A N/A N/A 0.0685 0.0628
- -----------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 12/94(9) 12/95 10/96(1) 10/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $17.24 $17.68 $24.08 $25.20
Net investment income (loss)(2) (0.35) (0.39) (0.28) (0.45)
Net realized and unrealized gain (loss) on investments 2.05 8.43 1.40 5.60
Total from investment operations 1.70 8.04 1.12 5.15
Less distributions:
Distributions from net realized gain on investments sold (1.26) (1.64) -- (1.23)
Net asset value, end of period $17.68 $24.08 $25.20 $29.12
Total investment return at net asset value(3) (%) 10.02 45.42 4.65(4) 21.04
Total adjusted investment return at net asset value(3,5) -- 45.30 -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 9,324 35,754 50,949 65,851
Ratio of expenses to average net assets (%) 2.90(6) 2.41 2.27(6) 2.21
Ratio of adjusted expenses to average net assets(7) (%) -- 2.53 -- --
Ratio of net investment income (loss) to average net assets (%) (1.98)(6) (1.62) (1.38)(6) (1.65)
Ratio of adjusted net investment income (loss) to
average net assets(7) (%) -- (1.74) -- --
Portfolio turnover rate (%) 67 70 64 104
Fee reduction per share ($) -- 0.03(2) -- --
Average brokerage commission rate(8) ($) N/A N/A 0.0685 0.0628
</TABLE>
(1) Effective October 31, 1996, the fiscal year end changed from December 31
to October 31.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) An estimated total return calculation that does not take into
consideration fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
(9) Class B shares commenced operations on January 3, 1994.
GROWTH - GLOBAL TECHNOLOGY FUND 11
<PAGE>
International Fund
REGISTRANT NAME:
JOHN HANCOCK INVESTMENT TRUST III TICKER SYMBOL
CLASS A: FINAX CLASS B: FINBX CLASS C: N/A
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital. To pursue this goal, the
fund invests primarily in stocks of foreign companies. Under normal
circumstances, the fund invests at least 65% of assets in these companies. The
fund maintains a diversified portfolio of company and government securities from
around the world, and generally expects that at any one time it will invest in
the securities markets of at least three non-U.S. countries.
The fund does not maintain a fixed allocation of assets, either with respect to
securities type or to geography. The fund looks for companies of any size whose
earnings show strong growth or that appear to be undervalued.
PORTFOLIO SECURITIES
[Clip Art] Under normal circumstances, the fund invests primarily in common
stocks and other equity securities, but may invest in almost any type of
security, foreign or domestic, including preferred and convertible securities,
warrants and investment-grade debt securities.
For liquidity and flexibility, the fund may place up to 35% of assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest up to 100% in these securities as a defensive tactic. The fund also may
invest in certain higher-risk securities, and may engage in other investment
practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements.
Because it invests internationally, the fund carries additional risks, including
currency, information, natural event and political risks. These risks, which may
make the fund more volatile than a comparable domestic growth fund, are defined
in "More about risk" starting on page 31. The risks of international investing
are higher in emerging markets such as those of Latin America, Asia and Eastern
Europe.
To the extent that the fund invests in smaller-capitalization companies or
utilizes higher-risk securities and practices, it takes on further risks that
could adversely affect its performance. Please read "More about risk" carefully
before investing.
MANAGEMENT/SUBADVISER
[Clip Art] Miren Etcheverry, John L.F. Wills, and Gerardo J. Espinoza lead the
fund's portfolio management team. Ms. Etcheverry and Mr. Espinoza are senior
vice presidents and joined John Hancock Funds in December 1996, having been in
the investment business since 1978 and 1979, respectively. Mr. Wills is a senior
vice president of the adviser and managing director of the subadviser, John
Hancock Advisers International Limited. He joined John Hancock Funds in 1987 and
has been in the investment business since 1969.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past fiscal year, adjusted to
reflect any changes. Because no Class C shares were outstanding during the past
year, Class C expenses are based on Class B expenses. Future expenses may be
greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- --------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none none
Maximum sales charge imposed on
reinvested dividends none none none
Maximum deferred sales charge none(1) 5.00% 1.00%
Redemption fee(2) none none none
Exchange fee none none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee (after expense
limitation)(3,4) 0.00% 0.00% 0.00%
12b-1 fee(5) 0.30% 1.00% 1.00%
Other expenses (after limitation)(3) 1.43% 1.43% 1.43%
Total fund operating expenses
(after limitation)(3) 1.73% 2.43% 2.43%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $67 $102 $139 $244
Class B shares
Assuming redemption
at end of period $75 $106 $150 $259
Assuming no redemption $25 $76 $130 $259
Class C shares
Assuming redemption
at end of period $35 $76 $130 $277
Assuming no redemption $25 $76 $130 $277
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Reflects the adviser's agreement to limit expenses (except for 12b-1 and
transfer agent expenses). Without this limitation, management fees would
be 1.00% for each class, other expenses would be 1.73% for each class and
total fund operating expenses would be 3.03% for Class A and 3.73% for
Class B and Class C. The adviser may terminate this limitation at any
time.
(4) Includes a subadviser fee equal to 0.70% of the fund's net assets.
(5) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
12 GROWTH - INTERNATIONAL FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Price Waterhouse LLP.
[The following table was represented as a bar graph in the printed materials.]
Volatility, as indicated by Class A
year-by-year total investment return (%) 1.77(4) (4.96) 6.88 (3.22)
(scale varies from fund to fund)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/94(1) 10/95 10/96 10/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $8.65 $8.14 $8.70
Net investment income (loss) 0.07(2) 0.04 0.06(2) (0.02)(2)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.08 (0.47) 0.50 (0.26)
Total from investment operations 0.15 (0.43) 0.56 (0.28)
Less distributions:
Dividends from net investment income -- (0.03) -- (0.01)
Distributions from net realized gain on investments
sold and foreign currency transactions -- (0.05) -- --
Total distributions -- (0.08) -- (0.01)
Net asset value, end of period $8.65 $8.14 $8.70 $8.41
Total investment return at net asset value(3) (%) 1.77(4) (4.96) 6.88 (3.22)
Total adjusted investment return at net asset value(3,5) (%) (0.52)(4) (8.12) 5.33 (4.52)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 4,426 4,215 5,098 4,965
Ratio of expenses to average net assets (%) 1.50(6) 1.64 1.75 1.73(7)
Ratio of adjusted expenses to average net assets(8) (%) 3.79(6) 4.80 3.30 3.03(7)
Ratio of net investment income (loss) to average net assets (%) 1.02(6) 0.56 0.68 (0.16)
Ratio of adjusted net investment income (loss) to average net assets(8) (%) (1.27)(6) (2.60) (0.87) (1.46)
Portfolio turnover rate (%) 50 69 83 169
Fee reduction per share(2) ($) 0.16 0.25 0.14 0.12
Average brokerage commission rate(9) ($) N/A N/A 0.0192 0.0186
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/94(1) 10/95 10/96 10/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $8.61 $8.05 $8.55
Net investment income (loss) 0.02(2) (0.03) 0.00(2,10) (0.08)(2)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.09 (0.48) 0.50 (0.25)
Total from investment operations 0.11 (0.51) 0.50 (0.33)
Less distributions:
Distributions from net realized gain on investments
sold and foreign currency transactions -- (0.05) -- --
Net asset value, end of period $8.61 $8.05 $8.55 $8.22
Total investment return at net asset value(3) (%) 1.29(4) (5.89) 6.21 (3.86)
Total adjusted investment return at net asset value(3,5) (%) (1.00)(4) (9.05) 4.66 (5.16)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 3,948 3,990 8,175 8,713
Ratio of expenses to average net assets (%) 2.22(6) 2.52 2.45 2.43(7)
Ratio of adjusted expenses to average net assets(8) (%) 4.51(6) 5.68 4.00 3.73(7)
Ratio of net investment income (loss) to average net assets (%) 0.31(6) (0.37) 0.02 (0.88)
Ratio of adjusted net investment income (loss) to average net assets(8) (%) (1.98)(6) (3.53) (1.53) (2.18)
Portfolio turnover rate (%) 50 69 83 169
Fee reduction per share(2) ($) 0.16 0.25 0.14 0.12
Average brokerage commission rate(9) ($) N/A N/A 0.0192 0.0186
</TABLE>
(1) Class A and Class B shares commenced operations on January 3, 1994.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) An estimated total return calculation that does not take into
consideration fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Expense ratios do not include interest expense due to bank loans, which
amounted to less than $0.01 cents per share.
(8) Unreimbursed, without fee reduction.
(9) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
(10) Less than $0.01 per share.
GROWTH - INTERNATIONAL FUND 13
<PAGE>
Pacific Basin Equities Fund
REGISTRANT NAME: JOHN HANCOCK WORLD FUND
TICKER SYMBOL CLASS A: JHWPX CLASS B: FPBBX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital. To pursue this goal, the
fund invests primarily in a diversified portfolio of stocks of Pacific Basin
companies. The Pacific Basin includes countries bordering the Pacific Ocean.
Under normal circumstances, the fund invests at least 65% of assets in these
companies, with the balance invested in equities of companies not in the Pacific
Basin countries and in investment-grade debt securities of U.S., Japanese,
Australian and New Zealand issuers.
The fund does not maintain a fixed allocation of assets. The fund may at times
invest less than 65% of assets in Pacific Basin equities.
PORTFOLIO SECURITIES
[Clip Art] Under normal circumstances, the fund invests primarily in common
stocks and other equity securities, but may invest in virtually any type of
security, foreign or domestic, including preferred and convertible securities,
warrants and investment-grade debt securities.
For liquidity and flexibility, the fund may place up to 35% of assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest up to 100% in these securities as a defensive tactic. The fund also may
invest in certain higher-risk securities, and may engage in other investment
practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Because the fund concentrates on one
region, investors should expect above-average volatility.
Also, because the fund invests internationally, it carries additional risks,
including currency, information, natural event and political risks. These risks,
which may make the fund more volatile than a comparable domestic growth fund,
are defined in "More about risk" starting on page 31. The risks of international
investing are higher in emerging markets, a category that includes many Pacific
Basin countries.
To the extent that the fund utilizes higher-risk securities and practices, it
takes on further risks that could adversely affect its performance. Please read
"More about risk" carefully before investing.
MANAGEMENT/SUBADVISERS
[Clip Art] The fund's management is carried out jointly by the adviser's
international equities portfolio management team and two subadvisers, Indocam
Asia Advisers Limited and John Hancock Advisers International Limited. Indocam
is majority owned by Caisse Nationale de Credit Agricole, a French banking
institution.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Future expenses may be greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B
- --------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee(3) 0.80% 0.80%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.96% 0.96%
Total fund operating expenses 2.06% 2.76%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $70 $111 $155 $277
Class B shares
Assuming redemption
at end of period $78 $116 $166 $292
Assuming no redemption $28 $86 $146 $292
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Includes a subadviser fee equal to 0.35% of the fund's net assets.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
14 GROWTH - PACIFIC BASIN EQUITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Price Waterhouse LLP.
[The following table was represented as a bar graph in the printed materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class
A year-by-year total investment return (%) (3.61)(6) 18.06 (0.44) (2.15) (1.99) 49.61 22.82 (7.65) 4.47 (1.83)(6) (19.03)
(scale varies from fund to fund) two
months
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 8/88(1) 8/89 8/90 8/91 8/92 8/93
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $10.00 $9.61 $11.10 $10.34 $9.05 $8.87
Net investment income (loss) 0.01 (0.02) (0.04) (0.01) (0.07)(3) (0.11)(3)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (0.37) 1.75 0.11 (0.33) (0.11) 4.51
Total from investment operations (0.36) 1.73 0.07 (0.34) (0.18) 4.40
Less distributions:
Dividends from net investment income (0.03) (0.01) -- -- -- --
Distributions from net realized gain on
investments sold and foreign
currency transactions -- (0.23) (0.83) (0.95) -- --
Total distributions (0.03) (0.24) (0.83) (0.95) -- --
Net asset value, end of period $9.61 $11.10 $10.34 $9.05 $8.87 $13.27
Total investment return at net asset
value(5) (%) (3.61)(6) 18.06 (0.44) (2.15) (1.99) 49.61
Total adjusted investment return at net
asset value(5,7) (%) (8.05)(6) 15.12 (2.86) (5.19) (5.57) 48.31
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 4,771 5,116 4,578 4,065 3,222 14,568
Ratio of expenses to average net assets (%) 1.75(8) 1.75 2.45 2.75 2.73 2.94
Ratio of adjusted expenses to average
net assets(9) (%) 6.19(8) 4.69 4.89 5.79 6.31 4.24
Ratio of net investment income (loss) to
average net assets (%) 0.04(8) (0.15) (0.28) (0.06) (0.82) (0.98)
Ratio of adjusted net investment income
(loss) to average net assets(9) (%) (4.40)(8) (3.09) (2.70) (3.10) (4.40) (2.28)
Portfolio turnover rate (%) 148 227 154 151 179 171
Fee reduction per share ($) 1.15 0.39 0.31 0.24 0.31(3) 0.14(3)
Average brokerage commission rate(10) ($) N/A N/A N/A N/A N/A N/A
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 8/94 8/95 8/96 10/96(2) 10/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $13.27 $15.88 $14.11 $14.74 $14.47
Net investment income (loss) (0.10)(3) 0.02(3,4) (0.02)(3) (0.02)(3) (0.07)(3)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 3.12 (1.24) 0.65 (0.25) (2.66)
Total from investment operations 3.02 (1.22) 0.63 (0.27) (2.73)
Less distributions:
Dividends from net investment income -- -- -- -- --
Distributions from net realized gain on
investments sold and foreign
currency transactions (0.41) (0.55) -- -- (0.11)
Total distributions (0.41) (0.55) -- -- (0.11)
Net asset value, end of period $15.88 $14.11 $14.74 $14.47 $11.63
Total investment return at net asset
value(5) (%) 22.82 (7.65) 4.47 (1.83)(6) (19.03)
Total adjusted investment return at net
asset value(5,7) (%) -- -- -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 50,261 37,417 41,951 38,694 21,109
Ratio of expenses to average net assets (%) 2.43 2.05 1.97 2.21(8) 2.06
Ratio of adjusted expenses to average
net assets(9) (%) -- -- -- -- --
Ratio of net investment income (loss) to
average net assets (%) (0.66) 0.13(4) (0.15) (0.83)(8) (0.49)
Ratio of adjusted net investment income
(loss) to average net assets(9) (%) -- -- -- -- --
Portfolio turnover rate (%) 68 48 73 15 118
Fee reduction per share ($) -- -- -- -- --
Average brokerage commission rate(10) ($) N/A N/A 0.0183 0.0221 0.0076
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 8/94(1) 8/95 8/96 10/96(2) 10/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $15.11 $15.84 $13.96 $14.49 $14.20
Net investment income (loss) (3) (0.09) (0.09) (0.13) (0.04) (0.18)
Net realized and unrealized gain (loss)
on investments and
foreign currency transactions 0.82 (1.24) 0.66 (0.25) (2.59)
Total from investment operations 0.73 (1.33) 0.53 (0.29) (2.77)
Less distributions:
Distributions from net realized gain on
investments sold and foreign currency
transactions -- (0.55) -- -- (0.11)
Net asset value, end of period $15.84 $13.96 $14.49 $14.20 $11.32
Total investment return at net asset value(5) (%) (4.83)(6) (8.38) 3.80 (2.00)(6) (19.67)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 9,480 14,368 32,342 30,147 17,320
Ratio of expenses to average net assets (%) 3.00(8) 2.77 2.64 2.90(8) 2.76
Ratio of net investment income (loss) to
average net assets (%) (1.40)(8) (0.66) (0.86) (1.52)(8) (1.19)
Portfolio turnover rate (%) 68 48 73 15 118
Average brokerage commission rate(10) ($) N/A N/A 0.0183 0.0221 0.0076
</TABLE>
(1) Class A and Class B shares commenced operations on September 8, 1987 and
March 7, 1994, respectively.
(2) Effective October 31, 1996, the fiscal year end changed from August 31 to
October 31.
(3) Based on the average of the shares outstanding at the end of each month.
(4) May not accord to amounts shown elsewhere in the financial statements due
to the timing of sales and repurchases of fund shares in relation to
fluctuating market values of the investments of the fund.
(5) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(6) Not annualized.
(7) An estimated total return calculation that does not take into
consideration fee reductions by the adviser during the periods shown.
(8) Annualized.
(9) Unreimbursed, without fee reduction.
(10) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
GROWTH - PACIFIC BASIN EQUITIES FUND 15
<PAGE>
Short-Term Strategic Income Fund
REGISTRANT NAME:
JOHN HANCOCK INVESTMENT TRUST III TICKER SYMBOL
CLASS A: JHSAX CLASS B: FRSWX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks a high level of current income. To pursue this goal,
the fund invests primarily in debt securities issued or guaranteed by:
o foreign governments and companies including those in emerging markets
o the U.S. Government, its agencies or instrumentalities
o U.S. companies
Under normal circumstances, the fund invests assets in all three of these
sectors, but may invest up to 100% in any one sector. The fund maintains an
average portfolio maturity of three years or less.
PORTFOLIO SECURITIES
[Clip Art] The fund may invest in all types of debt securities. The fund's U.S.
Government securities may include mortgage-backed securities. The fund may
invest up to 67% of assets in securities rated as low as B and their unrated
equivalents. Bonds rated lower than BBB/Baa are considered junk bonds. However,
the fund maintains an average portfolio quality rating of A, which is an
investment-grade rating.
Because the fund is non-diversified, it may invest more than 5% of assets in
securities of a single issuer, but no more than 25% of assets in the securities
of any one foreign government. The fund also may invest in certain other
investments, including derivatives, and may engage in other investment
practices.
RISK FACTORS
[Clip Art] The value of your investment in the fund will fluctuate with changes
in currency exchange rates as well as interest rates. Typically, a rise in
interest rates causes a decline in the market value of fixed-income securities.
International investing, particularly in emerging markets, carries additional
risks, including currency, information, natural event and political risks. Junk
bonds may carry above-average credit and market risks and mortgage-backed
securities may carry extension and prepayment risks. These risks are defined in
"More about risk" starting on page 31.
To the extent that the fund utilizes higher-risk securities and practices, it
takes on further risks that could adversely affect its performance. Please read
"More about risk" carefully before investing.
PORTFOLIO MANAGEMENT
[Clip Art] Anthony A. Goodchild and Lawrence J. Daly lead the portfolio
management team. Messrs. Goodchild and Daly are senior vice presidents and
joined John Hancock Funds in July 1994, having been in the investment business
since 1968 and 1972, respectively.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Future expenses may be greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B
- --------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 3.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 3.00%
Redemption fee(2) none none
Exchange fee none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee 0.65% 0.65%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.48% 0.48%
Total fund operating expenses 1.43% 2.13%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $44 $74 $106 $196
Class B shares
Assuming redemption
at end of period $52 $87 $114 $204
Assuming no redemption $22 $67 $114 $204
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
16 INCOME - SHORT-TERM STRATEGIC INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Price Waterhouse LLP.
[The following table was represented as a bar graph in the printed materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class B
year-by-year total investment return (%) 8.85(4) 0.64 5.98 1.93 7.97 7.89 4.83
(scale varies from fund to fund)
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/92(1) 10/93 10/94 10/95 10/96 10/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $9.86 $9.32 $9.12 $8.47 $8.41 $8.46
Net investment income (loss) 0.65 0.83(2) 0.76(2) 0.77(2) 0.65 0.61(2)
Net realized and unrealized gain (loss) on
investments and
foreign currency transactions (0.55) (0.20) (0.53) (0.06) 0.05 (0.15)
Total from investment operations 0.10 0.63 0.23 0.71 0.70 0.46
Less distributions:
Dividends from net investment income (0.64) (0.83) (0.62) (0.61) (0.57) (0.52)
Distributions in excess of net investment income -- -- (0.04) -- -- (0.08)
Distributions in excess of net realized gain on
investments sold -- -- (0.12) -- -- --
Distributions from capital paid-in -- -- (0.10) (0.16) (0.08) (0.01)
Total distributions (0.64) (0.83) (0.88) (0.77) (0.65) (0.61)
Net asset value, end of period $9.32 $9.12 $8.47 $8.41 $8.46 $8.31
Total investment return at net asset value(3) (%) 1.16(4) 6.78 2.64 8.75 8.60 5.55
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 20,468 11,130 13,091 16,997 49,338 64,059
Ratio of expenses to average net assets (%) 1.37(4) 1.21 1.26 1.33 1.48 1.43
Ratio of net investment income (loss) to average
net assets (%) 8.09(4) 8.59 8.71 9.13 7.59 7.22
Portfolio turnover rate (%) 86 306 150 147 77 71
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/91(1) 10/92 10/93 10/94 10/95 10/96 10/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $10.00 $10.01 $9.31 $9.11 $8.46 $8.40 $8.45
Net investment income (loss) 0.76 0.87 0.75(2) 0.70(2) 0.70(2) 0.59 0.55(2)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 0.01 (0.80) (0.20) (0.53) (0.06) 0.05 (0.15)
Total from investment operations 0.77 0.07 0.55 0.17 0.64 0.64 0.40
Less distributions:
Dividends from net investment income (0.76) (0.77) (0.75) (0.56) (0.56) (0.52) (0.47)
Distributions in excess of net
investment income -- -- -- (0.04) -- -- (0.07)
Distributions in excess of net realized
gain on investments sold -- -- -- (0.12) -- -- --
Distributions from capital paid-in -- -- -- (0.10) (0.14) (0.07) (0.01)
Total distributions (0.76) (0.77) (0.75) (0.82) (0.70) (0.59) (0.55)
Net asset value, end of period $10.01 $9.31 $9.11 $8.46 $8.40 $8.45 $8.30
Total investment return at net asset
value(3) (%) 8.85(4) 0.64 5.98 1.93 7.97 7.89 4.83
Total adjusted investment return at net
asset value(3,5) (%) 8.81(4) -- -- -- -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 218,562 236,059 142,873 98,390 84,601 48,137 25,908
Ratio of expenses to average net assets (%) 1.89(4) 2.07 2.01 1.99 2.07 2.12 2.13
Ratio of adjusted expenses to average net
assets(6) (%) 1.93(4) -- -- -- -- -- --
Ratio of net investment income to average
net assets (%) 8.72(4) 8.69 7.81 8.00 8.40 7.07 6.51
Ratio of adjusted net investment income
to average net assets(6) (%) 8.68(4) -- -- -- -- -- --
Portfolio turnover rate (%) 22 86 306 150 147 77 71
Fee reduction per share ($) 0.0039 -- -- -- -- -- --
</TABLE>
(1) Class A and Class B shares commenced operations on January 3, 1992 and
December 28, 1990, respectively.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Annualized.
(5) An estimated total return calculation that does not take into
consideration fee reductions by the adviser during the periods shown.
(6) Unreimbursed, without fee reduction.
INCOME - SHORT-TERM STRATEGIC INCOME FUND 17
<PAGE>
World Bond Fund
REGISTRANT NAME:
JOHN HANCOCK INVESTMENT TRUST III TICKER SYMBOL
CLASS A: FGLAX CLASS B: FGLIX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks a high total investment return -- a combination of
current income and capital appreciation. To pursue this goal, the fund invests
at least 65% of assets in debt securities issued or guaranteed by:
o foreign governments and companies including those in emerging markets
o multinational organizations such as the World Bank
o the U.S. Government, its agencies or instrumentalities
Under normal circumstances, the fund expects to invest in the securities markets
of at least three countries at any one time, potentially including the U.S. The
fund does not maintain a fixed allocation of assets.
PORTFOLIO SECURITIES
[Clip Art] The fund may invest in all types of debt securities of any maturity,
including preferred and convertible securities. Less than 35% of assets may be
invested in junk bonds rated as low as CCC/Caa, or equivalent.
Because the fund is non-diversified, it may invest more than 5% of assets in
securities of a single issuer, but no more than 25% of assets in the securities
of any one foreign government.
For liquidity and flexibility, the fund may place up to 35% of assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest more assets in these securities as a defensive tactic. The fund also may
invest in certain other investments, including derivatives, and may engage in
other investment practices.
RISK FACTORS
[Clip Art] As with most bond funds, the value of your investment in the fund
will fluctuate with changes in interest rates. Typically, a rise in interest
rates causes a decline in the market value of fixed income securities.
International investing, particularly in emerging markets, carries additional
risks, including currency, information, natural event and political risks. Junk
bonds may carry above-average credit and market risks and mortgage-backed
securities may carry extension and prepayment risks. These risks are defined in
"More about risk" starting on page 31.
To the extent that the fund utilizes higher-risk securities and practices, it
takes on further risks that could adversely affect its performance. Please read
"More about risk" carefully before investing.
PORTFOLIO MANAGEMENT
[Clip Art] Anthony A. Goodchild and Lawrence J. Daly lead the portfolio
management team. Messrs. Goodchild and Daly are senior vice presidents and
joined John Hancock Funds in July 1994, having been in the investment business
since 1968 and 1972, respectively.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Future expenses may be greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B
- --------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 4.50% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee 0.75% 0.75%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.63% 0.63%
Total fund operating expenses 1.68% 2.38%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $61 $96 $132 $235
Class B shares
Assuming redemption
at end of period $74 $104 $147 $254
Assuming no redemption $24 $74 $127 $254
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
18 INCOME - WORLD BOND FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Price Waterhouse LLP.
[The following table was represented as a bar graph in the printed materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class B
year-by-year total investment return (%) 20.09 5.47 11.84 10.44 1.72 6.77 (1.88) 11.51 4.78 2.43
(scale varies from fund to fund)
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/92(1) 10/93 10/94 10/95 10/96 10/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $10.57 $9.76 $9.62 $8.85 $9.30 $9.28
Net investment income (loss) 0.64 0.76 0.64(2) 0.57(2) 0.51(2) 0.53(2)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (0.74) (0.10) (0.78) 0.48 (0.02) (0.25)
Total from investment operations (0.10) 0.66 (0.14) 1.05 0.49 0.28
Less distributions:
Dividends from net investment income (0.71) (0.38) (0.11) (0.59) (0.50) (0.25)
Distributions in excess of net investment
income -- (0.04) -- -- -- (0.02)
Distributions from capital paid-in -- (0.38) (0.52) (0.01) (0.01) (0.26)
Total distributions (0.71) (0.80) (0.63) (0.60) (0.51) (0.53)
Net asset value, end of period $9.76 $9.62 $8.85 $9.30 $9.28 $9.03
Total investment return at net asset
value(3) (%) (0.88)(4) 7.14 (1.30) 12.25 5.48 3.15
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 12,880 12,882 8,949 35,334 27,537 28,959
Ratio of expenses to average net assets (%) 1.41(4) 1.46 1.59 1.48 1.58 1.68(5)
Ratio of net investment income (loss)
to average net assets (%) 7.64(4) 7.89 7.00 6.43 5.54 5.84
Portfolio turnover rate (%) 476 363 174 263 214 153
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/88 10/89 10/90 10/91 10/92 10/93 10/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $10.32 $10.98 $10.21 $10.38 $10.44 $9.74 $9.62
Net investment income (loss) 0.67 0.83 0.85 0.90 0.78 0.72 0.59(2)
Net realized and unrealized gain
(loss) on investments
and foreign currency transactions 1.31 (0.27) 0.28 0.13 (0.59) (0.09) (0.78)
Total from investment operations 1.98 0.56 1.13 1.03 0.19 0.63 (0.19)
Less distributions:
Dividends from net investment income (0.68) (0.84) (0.85) (0.73) (0.89) (0.33) (0.06)
Distributions from net realized gain
on investments (0.64) (0.49) -- (0.24) -- -- --
Distributions in excess of net
investment income -- -- -- -- -- (0.04) --
Distributions from capital paid-in -- -- (0.11) -- -- (0.38) (0.52)
Total distributions (1.32) (1.33) (0.96) (0.97) (0.89) (0.75) (0.58)
Net asset value, end of period $10.98 $10.21 $10.38 $10.44 $9.74 $9.62 $8.85
Total investment return at net
asset value(3) (%) 20.09 5.47 11.84 10.44 1.72 6.77 (1.88)
Ratios and supplemental data
Net assets, end of period
(000s omitted) ($) 174,833 255,214 186,524 192,687 199,102 197,166 114,656
Ratio of expenses to average net
assets (%) 1.74 1.75 1.82 1.90 1.91 1.91 2.17
Ratio of net investment income
(loss) to average net assets (%) 6.04 8.07 8.67 8.74 7.59 7.45 6.41
Portfolio turnover rate (%) 364 333 186 159 476 363 174
<CAPTION>
- --------------------------------------------------------------------------------
Class B - period ended: 10/95 10/96 10/97
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.85 $9.30 $9.28
Net investment income (loss) 0.55(2) 0.45(2) 0.47(2)
Net realized and unrealized gain
(loss) on investments
and foreign currency transactions 0.44 (0.02) (0.25)
Total from investment operations 0.99 0.43 0.22
Less distributions:
Dividends from net investment income (0.53) (0.44) (0.23)
Distributions from net realized gain
on investments -- -- --
Distributions in excess of net
investment income -- -- (0.01)
Distributions from capital paid-in (0.01) (0.01) (0.23)
Total distributions (0.54) (0.45) (0.47)
Net asset value, end of period $9.30 $9.28 $9.03
Total investment return at net
asset value(3) (%) 11.51 4.78 2.43
Ratios and supplemental data
Net assets, end of period
(000s omitted) ($) 65,600 45,897 24,082
Ratio of expenses to average net
assets (%) 2.16 2.25 2.38(5)
Ratio of net investment income
(loss) to average net assets (%) 6.03 4.87 5.13
Portfolio turnover rate (%) 263 214 153
</TABLE>
(1) Class A shares commenced operations on January 3, 1992.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Annualized.
(5) Expense ratios do not include interest expense due to bank loans, which
amounted to less than $0.01 per share.
INCOME - WORLD BOND FUND 19
<PAGE>
Your account
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS
All John Hancock international/global funds offer two classes of shares, Class A
and Class B. In addition, Class C shares are available for International Fund.
Each class has its own cost structure as outlined below, allowing you to choose
the one that best meets your requirements. For more details, see "How sales
charges are calculated." Your financial representative can help you decide which
share class is best for you.
- --------------------------------------------------------------------------------
Class A - for all funds
- --------------------------------------------------------------------------------
o Front-end sales charges. There are several ways to reduce these
charges, described under "Sales charge reductions and waivers" on the
following page.
o Lower annual expenses than Class B and Class C shares.
- --------------------------------------------------------------------------------
Class B - for all funds
- --------------------------------------------------------------------------------
o No front-end sales charge; all your money goes to work for you right
away.
o Higher annual expenses than Class A shares.
o A contingent deferred sales charge that declines from 5% over six
years (3% over four years for Short-Term Strategic Income Fund).
o Automatic conversion to Class A shares after eight years, thus
reducing future annual expenses.
- --------------------------------------------------------------------------------
Class C - for International Fund
- --------------------------------------------------------------------------------
o No front-end sales charge; all your money goes to work for you right
away.
o Higher annual expenses than Class A shares.
o A 1% contingent deferred sales charge on shares sold within one year
of purchase.
o No automatic conversion to Class A shares, so the fund's annual
expenses continue at the same level throughout the life of your
investment.
For actual past expenses of Class A and Class B shares, see the fund-by-fund
information earlier in this prospectus.
- --------------------------------------------------------------------------------
HOW SALES CHARGES ARE CALCULATED
Class A Sales charges are as follows:
- --------------------------------------------------------------------------------
Class A sales charges - Short-Term Strategic Income
- --------------------------------------------------------------------------------
As a % of As a % of your
Your investment offering price investment
Up to $99,999 3.00% 3.09%
$100,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 and over See below
- --------------------------------------------------------------------------------
Class A sales charges - World Bond
- --------------------------------------------------------------------------------
As a % of As a % of your
Your investment offering price investment
Up to $99,999 4.50% 4.71%
$100,000 - $249,999 3.75% 3.90%
$250,000 - $499,999 2.75% 2.83%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 and over See below
- --------------------------------------------------------------------------------
Class A sales charges - growth funds
- --------------------------------------------------------------------------------
As a % of As a % of your
Your investment offering price investment
Up to $49,999 5.00% 5.26%
$50,000 - $99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 and over See below
Investments of $1 million or more Class A shares are available with no front-end
sales charge. However, there is a contingent deferred sales charge (CDSC) on any
shares sold within one year of purchase, as follows:
- --------------------------------------------------------------------------------
CDSC on $1 million+ investments (all funds)
- --------------------------------------------------------------------------------
Your investment CDSC on shares being sold
First $1M - $4,999,999 1.00%
Next $1 - $5M above that 0.50%
Next $1 or more above that 0.25%
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the LAST day of that month.
20 YOUR ACCOUNT
<PAGE>
The CDSC is based on the lesser of the original purchase cost or the current
market value of the shares being sold, and is not charged on shares you acquired
by reinvesting your dividends. To keep your CDSC as low as possible, each time
you place a request to sell shares we will first sell any shares in your account
that are not subject to a CDSC.
Class B Shares are offered at their net asset value per share, without any
initial sales charge. However, you may be charged a contingent deferred sales
charge (CDSC) on shares you sell within a certain time after you bought them, as
described in the table below. There is no CDSC on shares acquired through
reinvestment of dividends. The CDSC is based on the original purchase cost or
the current market value of the shares being sold, whichever is less. The longer
the time between the purchase and the sale of shares, the lower the rate of the
CDSC:
- --------------------------------------------------------------------------------
Class B deferred charges
- --------------------------------------------------------------------------------
Years after CDSC on Short-Term CDSC on all
purchase Strategic Income other fund shares
shares being sold being sold
1st year 3.00% 5.00%
2nd year 2.00% 4.00%
3rd year 2.00% 3.00%
4th year 1.00% 3.00%
5th year None 2.00%
6th year None 1.00%
After 6 years None None
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the FIRST day of that month.
CDSC calculations are based on the number of shares involved, not on the value
of your account. To keep your CDSC as low as possible, each time you place a
request to sell shares we will first sell any shares in your account that carry
no CDSC. If there are not enough of these to meet your request, we will sell
those shares that have the lowest CDSC.
Class C Shares are offered at their net asset value per share, without any
initial sales charge. However, you may be charged a contingent deferred sales
charge (CDSC) of 1% on shares you sell within one year of purchase. There is no
CDSC on shares acquired through reinvestment of dividends. The CDSC is based on
the original purchase cost or the current market value of the shares being sold,
whichever is less.
CDSC calculations are based on the number of shares involved, not on the value
of your account. Each time you place a request to sell shares we will first sell
any shares in your account that carry no CDSC.
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the FIRST day of that month.
- --------------------------------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
Reducing your Class A sales charges There are several ways you can combine
multiple purchases of Class A shares of John Hancock funds to take advantage of
the breakpoints in the sales charge schedule. The first three ways can be
combined in any manner.
o Accumulation Privilege -- lets you add the value of any Class A shares you
already own to the amount of your next Class A investment for purposes of
calculating the sales charge. Retirement plans investing $1 million in
Class B shares may add that value to Class A purchases to calculate sales
charges.
o Letter of Intention -- lets you purchase Class A shares of a fund over a
13-month period and receive the same sales charge as if all shares had been
purchased at once.
o Combination Privilege -- lets you combine Class A shares of multiple funds
for purposes of calculating the sales charge.
To utilize: complete the appropriate section of your application, contact your
financial representative or Signature Services or consult the SAI (see the back
cover of this prospectus).
Group Investment Program A group may be treated as a single purchase under the
accumulation and combination privileges. Each investor has an individual
account, but the group's investments are lumped together for sales charge
purposes, making the investors potentially eligible for reduced sales charges.
There is no charge, no obligation to invest (although initial investments must
total at least $250) and individual investors may close their accounts at any
time.
To utilize: contact your financial representative or Signature Services to find
out how to qualify, or consult the SAI (see the back cover of this prospectus).
CDSC waivers As long as Signature Services is notified at the time you sell, the
CDSC for each share class will generally be waived in the following cases:
o to make payments through certain systematic withdrawal plans
o to make certain distributions from a retirement plan
o because of shareholder death or disability
o to purchase a John Hancock Declaration annuity
To utilize: if you think you may be eligible for a CDSC waiver, contact your
financial representative or Signature Services, or consult the SAI.
YOUR ACCOUNT 21
<PAGE>
Reinstatement privilege If you sell shares of a John Hancock fund, you may
reinvest some or all of the proceeds in the same share class of any John Hancock
fund within 120 days without a sales charge, as long as Signature Services is
notified before you reinvest. If you paid a CDSC when you sold your shares, you
will be credited with the amount of the CDSC. All accounts involved must have
the same registration.
To utilize: contact your financial representative or Signature Services.
Waivers for certain investors Class A shares may be offered without front-end
sales charges or CDSCs to various individuals and institutions, including:
o selling brokers and their employees and sales representatives
o financial representatives utilizing fund shares in fee-based investment
products under signed agreement with John Hancock Funds
o fund trustees and other individuals who are affiliated with these or other
John Hancock funds
o individuals transferring assets from an employee benefit plan with John
Hancock Funds into an individual account in a John Hancock fund
o certain insurance company contract holders (one-year CDSC usually applies)
o participants in certain retirement plans with at least 100 eligible
employees (one-year CDSC applies)
o clients of AFA, when their funds are transferred directly to Global
Technology Fund from accounts managed by AFA
o certain former shareholders of John Hancock National Aviation & Technology
Fund and Nova Fund (applies to Global Technology Fund only)
To utilize: if you think you may be eligible for a sales charge waiver, contact
Signature Services or consult the SAI.
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT
1 Read this prospectus carefully.
2 Determine how much you want to invest. The
minimum initial investments for the John Hancock funds are as follows:
o non-retirement account: $1,000
o retirement account: $250
o group investments: $250
o Monthly Automatic Accumulation Plan (MAAP): $25 to open; you must invest at
least $25 a month
o fee-based clients of selling brokers who placed at least $2 billion in John
Hancock funds: $250
3 Complete the appropriate parts of the account application, carefully
following the instructions. If you have questions, please contact your
financial representative or call Signature Services at 1-800-225-5291.
4 Complete the appropriate parts of the account privileges section of the
application. By applying for privileges now, you can avoid the delay and
inconvenience of having to file an additional application if you want to add
privileges later.
5 Make your initial investment using the table on the next page. You and your
financial representative can initiate any purchase, exchange or sale of
shares.
22 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
Buying shares
- --------------------------------------------------------------------------------
Opening an account Adding to an account
By check
[Clip art] o Make out a check for the o Make out a check for the
investment amount, payable to investment amount payable
"John Hancock Signature to "John Hancock Signature
Services, Inc." Services, Inc."
o Deliver the check and your o Fill out the detachable
completed application to your investment slip from an
financial representative, or account statement. If no
mail them to Signature Services slip is available, include
(address below). a note specifying the fund
name, your share class,
your account number and
the name(s) in which the
account is registered.
o Deliver the check and your
investment slip or note to
your financial
representative, or mail
them to Signature Services
(address below).
By exchange
[Clip art] o Call your financial o Call your financial
representative or Signature representative or Signature
Services to request an Services to request an
exchange. exchange.
By wire
[Clip art] o Deliver your completed o Instruct your bank to wire
application to your financial the amount of your
representative, or mail investment to:
it to Signature Services. First Signature Bank & Trust
Account # 900000260
o Obtain your account number Routing # 211475000
by calling your financial Specify the fund name, your
representative or share class, your account
Signature Services. number and the name(s)
in which the account is
o Instruct your bank to wire registered. Your bank may
the amount of your investment charge a fee to wire funds.
to:
First Signature Bank & Trust
Account # 900000260
Routing # 211475000
Specify the fund name, your
choice of share class, the new
account number and the name(s)
in which the account is
registered. Your bank may charge
a fee to wire funds.
By phone
[Clip art] See "By wire" and "By exchange." o Verify that your bank or
credit union is a member of
the Automated Clearing
House (ACH) system.
o Complete the "Invest-By-
Phone" and "Bank
Information" sections on
your account application.
o Call Signature Services to
verify that these features
are in place on your account.
o Tell the Signature Services
representative the fund name,
your share class, your
account number, the name(s)
in which the account is
registered and the amount
of your investment.
- ----------------------------------------
Address
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
Phone number
1-800-225-5291
Or contact your financial representative
for instructions and assistance.
- ----------------------------------------
To open or add to an account using the Monthly Automatic Accumulation Program,
see "Additional investor services."
YOUR ACCOUNT 23
<PAGE>
- --------------------------------------------------------------------------------
Selling shares
- --------------------------------------------------------------------------------
Designed for To sell some or all of your shares
By letter
[Clip art] o Accounts of any type. o Write a letter of instruction
or complete a stock power
o Sales of any amount. indicating the fund name, your
share class, your account
number, the name(s) in which
the account is registered and
the dollar value or number of
shares you wish to sell.
o Include all signatures and any
additional documents that may
be required (see next page).
o Mail the materials to Signature
Services.
o A check will be mailed to the
name(s) and address in which
the account is registered, or
otherwise according to your
letter of instruction.
By phone
[Clip art] o Most accounts. o For automated service 24 hours
a day using your touch-tone
o Sales of up to $100,000. phone, call the EASI-Line at
1-800-338-8080.
o To place your order with a
representative at John Hancock
Funds, call Signature Services
between 8 A.M. and 4 P.M.
Eastern Time on most business
days.
By wire or electronic funds transfer (EFT)
[Clip art] o Requests by letter to o Fill out the "Telephone
sell any amount (accounts Redemption" section of your
of any type). new account application.
o Requests by phone to sell o To verify that the telephone
up to $100,000 (accounts redemption privilege is in
with telephone redemption place on an account, or to
privileges). request the forms to add it
to an existing account, call
Signature Services.
o Amounts of $1,000 or more will
be wired on the next business
day. A $4 fee will be deducted
from your account.
o Amounts of less than $1,000
may be sent by EFT or by check.
Funds from EFT transactions
are generally available by
the second business day.
Your bank may charge a fee
for this service.
By exchange
[Clip art] o Accounts of any type. o Obtain a current prospectus for
the fund into which you are
o Sales of any amount. exchanging by calling your
financial representative or
Signature Services.
o Call your financial
representative or Signature
Services to request an exchange.
By check
[Clip art] o Short-Term Strategic Income o Request checkwriting on your
Fund only. account application.
o Any account with o Verify that the shares to be
checkwriting privileges. sold were purchased more
than 10 days earlier or were
o Sales of over $100. purchased by wire.
o Write a check for any amount
over $100.
----------------------------------------
Address
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
Phone
1-800-225-5291
Or contact your financial representative
for instructions and assistance.
----------------------------------------
To sell shares through a systematic withdrawal plan, see "Additional investor
services."
24 YOUR ACCOUNT
<PAGE>
Selling shares in writing In certain circumstances, you will need to make your
request to sell shares in writing. You may need to include additional items with
your request, as shown in the table below. You may also need to include a
signature guarantee, which protects you against fraudulent orders. You will need
a signature guarantee if:
o your address of record has changed within the past 30 days
o you are selling more than $100,000 worth of shares
o you are requesting payment other than by a check mailed to the address of
record and payable to the registered owner(s)
The signature guarantee must be from a member of the Signature Guarantee
Medallion Program (generally, a broker or securities dealer). We may refuse any
other source. A notary public CANNOT provide a signature guarantee.
- --------------------------------------------------------------------------------
Seller Requirements for written requests
[Clip art]
- --------------------------------------------------------------------------------
Owners of individual, joint, o Letter of instruction.
sole proprietorship, UGMA/UTMA o On the letter, the signatures and
(custodial accounts for minors) titles of all persons authorized to
or general partner accounts. sign for the account, exactly as
the account is registered.
o Signature guarantee if applicable
(see above).
Owners of corporate or o Letter of instruction.
association accounts. o Corporate resolution, certified
within the past twelve months.
o On the letter and the resolution,
the signature of the person(s)
authorized to sign for the account.
o Signature guarantee if applicable
(see above).
Owners or trustees of trust accounts. o Letter of instruction.
o On the letter, the signature(s) of
the trustee(s).
o If the names of all trustees are
not registered on the account,
please also provide a copy of the
trust document certified within the
past twelve months.
o Signature guarantee if applicable
(see above).
Joint tenancy shareholders whose o Letter of instruction signed by
co-tenants are deceased. surviving tenant.
o Copy of death certificate.
o Signature guarantee if applicable
(see above).
Executors of shareholder estates. o Letter of instruction signed by
executor.
o Copy of order appointing executor.
o Signature guarantee if applicable
(see above).
Administrators, conservators, o Call 1-800-225-5291 for
guardians and other sellers or instructions.
account types not listed above.
YOUR ACCOUNT 25
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION POLICIES
Valuation of shares The net asset value per share (NAV) for each fund and class
is determined each business day at the close of regular trading on the New York
Stock Exchange (typically 4 P.M. Eastern Time) by dividing a class's net assets
by the number of its shares outstanding.
Buy and sell prices When you buy shares, you pay the NAV plus any applicable
sales charges, as described earlier. When you sell shares, you receive the NAV
minus any applicable deferred sales charges.
Execution of requests Each fund is open on those days when the New York Stock
Exchange is open, typically Monday through Friday. Buy and sell requests are
executed at the next NAV to be calculated after your request is received by
Signature Services.
At times of peak activity, it may be difficult to place requests by phone.
During these times, consider using EASI-Line or sending your request in writing.
In unusual circumstances, any fund may temporarily suspend the processing of
sell requests, or may postpone payment of proceeds for up to three business days
or longer, as allowed by federal securities laws.
Telephone transactions For your protection, telephone requests may be recorded
in order to verify their accuracy. In addition, Signature Services will take
measures to verify the identity of the caller, such as asking for name, account
number, Social Security or other taxpayer ID number and other relevant
information. If appropriate measures are taken, Signature Services is not
responsible for any losses that may occur to any account due to an unauthorized
telephone call. Also for your protection, telephone transactions are not
permitted on accounts whose names or addresses have changed within the past 30
days. Proceeds from telephone transactions can only be mailed to the address of
record.
Exchanges You may exchange shares of one John Hancock fund for shares of the
same class of any other, generally without paying any additional sales charges.
The registration for both accounts involved must be identical. Class B and Class
C shares will continue to age from the original date and will retain the same
CDSC rate as they had before the exchange, except that the rate will change to
the new fund's rate if that rate is higher. A CDSC rate that has increased will
drop again with a future exchange into a fund with a lower rate.
To protect the interests of other investors in the fund, a fund may cancel the
exchange privileges of any parties that, in the opinion of the fund, are using
market timing strategies or making more than seven exchanges per owner or
controlling party per calendar year. A fund may also refuse any exchange order.
A fund may change or cancel its exchange policies at any time, upon 60 days'
notice to its shareholders.
Certificated shares Most shares are electronically recorded. If you wish to have
certificates for your shares, please write to Signature Services. Certificated
shares can only be sold by returning the certificates to Signature Services,
along with a letter of instruction or a stock power and a signature guarantee.
Sales in advance of purchase payments When you place a request to sell shares
for which the purchase money has not yet been collected, the request will be
executed in a timely fashion, but the fund will not release the proceeds to you
until your purchase payment clears. This may take up to ten business days after
the purchase.
Foreign currencies Purchases must be made in U.S. dollars. Purchases in foreign
currencies must be converted, which may result in a fee and delayed execution.
- --------------------------------------------------------------------------------
DIVIDENDS AND ACCOUNT POLICIES
Account statements In general, you will receive account statements as follows:
o after every transaction (except a dividend reinvestment) that affects your
account balance
o after any changes of name or address of the registered owner(s)
o in all other circumstances, every quarter
Every year you should also receive, if applicable, a Form 1099 tax information
statement, mailed by January 31.
Dividends The income funds generally declare income dividends daily and pay them
monthly. These income dividends begin accruing the day after payment is received
by the fund and continue through the day your shares are actually sold. The
growth funds pay income dividends, if any, annually. All funds distribute
capital gains, if any, annually.
26 YOUR ACCOUNT
<PAGE>
Dividend reinvestments Most investors have their dividends reinvested in
additional shares of the same fund and class. If you choose this option, or if
you do not indicate any choice, your dividends will be reinvested on the
dividend record date. Alternatively, you can choose to have a check for your
dividends mailed to you. However, if the check is not deliverable, your
dividends will be reinvested.
Taxability of dividends As long as a fund meets the requirements for being a
tax-qualified regulated investment company, which each fund has in the past and
intends to in the future, it pays no federal income tax on the earnings it
distributes to shareholders.
Consequently, dividends you receive from a fund, whether reinvested or taken as
cash, are generally considered taxable. Dividends from a fund's long-term
capital gains are taxable as capital gains; dividends from other sources are
generally taxable as ordinary income.
Some dividends paid in January may be taxable as if they had been paid the
previous December. Corporations may be entitled to take a dividends-received
deduction for a portion of certain dividends they receive from the growth funds.
Dividends may include a return of capital.
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category, although you should verify your tax liability with
your tax professional.
Taxability of transactions Any time you sell or exchange shares, it is
considered a taxable event for you. Depending on the purchase price and the sale
price of the shares you sell or exchange, you may have a gain or a loss on the
transaction. You are responsible for any tax liabilities generated by your
transactions.
Small accounts (non-retirement only) If you draw down a non-retirement account
so that its total value is less than $1,000, you may be asked to purchase more
shares within 30 days. If you do not take action, your fund may close out your
account and mail you the proceeds. Alternatively, Signature Services may charge
you $10 a year to maintain your account. You will not be charged a CDSC if your
account is closed for this reason, and your account will not be closed if its
drop in value is due to fund performance or the effects of sales charges.
- --------------------------------------------------------------------------------
ADDITIONAL INVESTOR SERVICES
Monthly Automatic Accumulation Program (MAAP) MAAP lets you set up regular
investments from your paycheck or bank account to the John Hancock fund(s) of
your choice. You determine the frequency and amount of your investments, and you
can terminate your program at any time. To establish:
o Complete the appropriate parts of your account application.
o If you are using MAAP to open an account, make out a check ($25 minimum) for
your first investment amount payable to "John Hancock Signature Services,
Inc." Deliver your check and application to your financial representative or
Signature Services.
Systematic withdrawal plan This plan may be used for routine bill payments or
periodic withdrawals from your account. To establish:
o Make sure you have at least $5,000 worth of shares in your account.
o Make sure you are not planning to invest more money in this account (buying
shares during a period when you are also selling shares of the same fund is
not advantageous to you, because of sales charges).
o Specify the payee(s). The payee may be yourself or any other party, and there
is no limit to the number of payees you may have, as long as they are all on
the same payment schedule.
o Determine the schedule: monthly, quarterly, semi-annually, annually or in
certain selected months.
o Fill out the relevant part of the account application. To add a systematic
withdrawal plan to an existing account, contact your financial representative
or Signature Services.
Retirement plans John Hancock Funds offers a range of retirement plans,
including Traditional and Roth IRAs, SIMPLE IRAs, SIMPLE 401(k)s, SEPs, 401(k)s,
money purchase pension and profit-sharing plans. Using these plans, you can
invest in any John Hancock fund (except tax-free income funds) with a low
minimum investment of $250 or, for some group plans, no minimum investment at
all. To find out more, call Signature Services at 1-800-225-5291.
YOUR ACCOUNT 27
<PAGE>
Fund details
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
How the funds are organized Each John Hancock international/global fund is an
open-end management investment company or a series of such a company.
Each fund is supervised by a board of trustees, an independent body that has
ultimate responsibility for the fund's activities. The board retains various
companies to carry out the fund's operations, including the investment adviser,
custodian, transfer agent and others (see diagram). The board has the right, and
the obligation, to terminate the fund's relationship with any of these companies
and to retain a different company if the board believes it is in the
shareholders' best interests.
At a mutual fund's inception, the initial shareholder (typically the adviser)
appoints the fund's board. Thereafter, the board and the shareholders determine
the board's membership. The boards of the John Hancock international/global
funds may include individuals who are affiliated with the investment adviser.
However, the majority of board members must be independent.
The funds do not hold annual shareholder meetings, but may hold special meetings
for such purposes as electing or removing board members, changing fundamental
policies, approving a management contract or approving a 12b-1 plan (12b-1 fees
are explained in "Sales compensation").
[The following information was represented as a flow chart in the printed
material.]
-----------------
Shareholders
-----------------
Distribution and
shareholder services
-------------------------------------------------
Financial services firms and
their representatives
Advise current and prospective share-
holders on their fund investments, often
in the context of an overall financial plan.
-------------------------------------------------
-------------------------------------------------
Principal distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
Markets the funds and distributes shares
through selling brokers, financial planners
and other financial representatives.
-------------------------------------------------
------------------------------------------------------
Transfer agent
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
Handles shareholder services, including record-
keeping and statements, distribution of dividends
and processing of buy and sell requests.
------------------------------------------------------
-------------------------------
Subadvisers
American Fund Advisors, Inc.
1415 Kellum Place
Garden City, NY 11530
John Hancock Advisers
International Limited
34 Dover Street
London, UK W1X 3RA
Indocam Asia Advisers Limited
One Exchange Square
Hong Kong
Indocam International
Investment Services
90 Boulevard Pasteur
Paris, France 75015
Provide portfolio management
to certain funds
-------------------------------
------------------------------------
Investment adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
Manages the funds' business and
investment activities.
------------------------------------
------------------------------------
Custodians
Investors Bank & Trust Co.
200 Clarendon Street
Boston, MA 02116
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Hold the funds' assets, settle all
portfolio trades and collect most of
the valuation data required for
calculating each fund's NAV.
------------------------------------
Asset
management
------------------------------------
Trustees
Supervise the funds' activities.
------------------------------------
28 FUND DETAILS
<PAGE>
Accounting compensation The funds (except for Global Technology) compensate the
adviser for performing tax and financial management services. Annual
compensation is not expected to exceed 0.02% of each fund's average net assets.
Global Technology pays a $100,000 administration fee to the adviser.
Portfolio trades In placing portfolio trades, the adviser or subadvisers may use
brokerage firms that market the fund's shares or are affiliated with John
Hancock Mutual Life Insurance Company or subadvisers, but only when the adviser
believes no other firm offers a better combination of quality execution (i.e.,
timeliness and completeness) and favorable price.
Investment goals Except for European Equity Fund, Global Rx Fund, International
Fund and World Bond Fund, each fund's investment goal is fundamental and may
only be changed with shareholder approval.
Diversification Except for Global Rx Fund, Short-Term Strategic Income Fund and
World Bond Fund, all of the international/global funds are diversified.
- --------------------------------------------------------------------------------
SALES COMPENSATION
As part of their business strategies, the funds, along with John Hancock Funds,
pay compensation to financial services firms that sell the funds' shares. These
firms typically pass along a portion of this compensation to your financial
representative.
Compensation payments originate from two sources: from sales charges and from
12b-1 fees that are paid out of the funds' assets ("12b-1" refers to the federal
securities regulation authorizing annual fees of this type). The 12b-1 fee rates
vary by fund and by share class, according to Rule 12b-1 plans adopted by the
funds. The sales charges and 12b-1 fees paid by investors are detailed in the
fund-by-fund information. The portions of these expenses that are reallowed to
financial services firms are shown on the next page.
Distribution fees may be used to pay for sales compensation to financial
services firms, marketing and overhead expenses and, for Class B and Class C
shares, interest expenses.
- --------------------------------------------------------------------------------
Class B unreimbursed distribution expenses(1)
- --------------------------------------------------------------------------------
Unreimbursed As a % of
Fund expenses net assets
European Equity Fund N/A N/A
Global $ 795,893 2.56%
Global Rx $ 466,209 1.06%
Global Technology $ 1,198,204 2.00%
International $ 460,399 4.90%
Pacific Basin Equities $ 1,045,211 3.85%
Short-Term Strategic Income $ 2,554,608 7.17%
World Bond $ 5,324,432 15.75%
(1) As of the most recent fiscal year end covered by each fund's financial
highlights. These expenses may be carried forward indefinitely.
Class C Class C shares began operations after the 1997 fiscal year. Therefore,
there are no unreimbursed expenses to report.
Initial compensation Whenever you make an investment in a fund or funds, the
financial services firm receives either a reallowance from the initial sales
charge or a commission, as described below. The firm also receives the first
year's service fee at this time.
Annual compensation Beginning with the second year after an investment is made,
the financial services firm receives an annual service fee of 0.25% of its total
eligible net assets. This fee is paid quarterly in arrears.
Financial services firms selling large amounts of fund shares may receive extra
compensation. This compensation, which John Hancock Funds pays out of its own
resources, may include asset retention fees as well as reimbursement for
marketing expenses.
FUND DETAILS 29
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A investments
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum
Sales charge reallowance First year Maximum
paid by investors or commission service fee total compensation(1)
(% of offering price) (% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C> <C>
Short-Term Strategic Income Fund
Up to $99,999 3.00% 2.26% 0.25% 2.50%
$100,000 - $499,999 2.50% 2.01% 0.25% 2.25%
$500,000 - $999,999 2.00% 1.51% 0.25% 1.75%
World Bond Fund
Up to $99,999 4.50% 3.76% 0.25% 4.00%
$100,000 - $249,999 3.75% 3.01% 0.25% 3.25%
$250,000 - $499,999 2.75% 2.06% 0.25% 2.30%
$500,000 - $999,999 2.00% 1.51% 0.25% 1.75%
Growth funds
Up to $49,999 5.00% 4.01% 0.25% 4.25%
$50,000 - $99,999 4.50% 3.51% 0.25% 3.75%
$100,000 - $249,999 3.50% 2.61% 0.25% 2.85%
$250,000 - $499,999 2.50% 1.86% 0.25% 2.10%
$500,000 - $999,999 2.00% 1.36% 0.25% 1.60%
Regular investments of
$1 million or more (all funds)
First $1M - $4,999,999 -- 0.75% 0.25% 1.00%
Next $1 - $5M above that -- 0.25% 0.25% 0.50%
Next $1 or more above that -- 0.00% 0.25% 0.25%
Waiver investments(2) -- 0.00% 0.25% 0.25%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B investments
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum
reallowance First year Maximum
or commission service fee total compensation
(% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C>
Short-Term Strategic Income Fund
All amounts 2.25% 0.25% 2.50%
All other funds
All amounts 3.75% 0.25% 4.00%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum
reallowance First year Maximum
or commission service fee total compensation
(% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C>
All amounts 0.75% 0.25% 1.00%
</TABLE>
(1) Reallowance/commission percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. For European
Equity Fund, John Hancock Funds may allow an amount up to the full
applicable sales charge.
(2) Refers to any investments made by municipalities, financial institutions,
trusts and affinity group members that take advantage of the sales charge
waivers described earlier in this prospectus.
CDSC revenues collected by John Hancock Funds may be used to pay commissions
when there is no initial sales charge.
30 FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
MORE ABOUT RISK
A fund's risk profile is largely defined by the fund's primary securities and
investment practices. You may find the most concise description of each fund's
risk profile in the fund-by-fund information.
The funds are permitted to utilize -- within limits established by the trustees
- -- certain other securities and investment practices that have higher risks and
opportunities associated with them. To the extent that a fund utilizes these
securities or practices, its overall performance may be affected, either
positively or negatively. On the following pages are brief descriptions of these
securities and practices, along with the risks associated with them. The funds
follow certain policies that may reduce these risks.
As with any mutual fund, there is no guarantee that the performance of a John
Hancock international/global fund will be positive over any period of time --
days, months or years. However, international markets have performed better over
the past two decades than domestic markets.
- --------------------------------------------------------------------------------
TYPES OF INVESTMENT RISK
Correlation risk The risk that changes in the value of a hedging instrument will
not match those of the asset being hedged (hedging is the use of one investment
to offset the effects of another investment).
Credit risk The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation.
Currency risk The risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment. Adverse
changes in exchange rates may erode or reverse any gains produced by foreign
currency denominated investments, and may widen any losses.
Extension risk The risk that an unexpected rise in interest rates will extend
the life of a mortgage-backed security beyond the expected prepayment time,
typically reducing the security's value.
Information risk The risk that key information about a security or market is
inaccurate or unavailable.
Interest rate risk The risk of market losses attributable to changes in interest
rates. With fixed-rate securities, a rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in values.
Leverage risk Associated with securities or practices (such as borrowing) that
multiply small index or market movements into large changes in value.
o Hedged When a derivative (a security whose value is based on another security
or index) is used as a hedge against an opposite position that the fund also
holds, any loss generated by the derivative should be substantially offset by
gains on the hedged investment, and vice versa. While hedging can reduce or
eliminate losses, it can also reduce or eliminate gains.
o Speculative To the extent that a derivative is not used as a hedge, the fund
is directly exposed to the risks of that derivative. Gains or losses from
speculative positions in a derivative may be substantially greater than the
derivative's original cost.
Liquidity risk The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like. The seller may
have to lower the price, sell other securities instead, or forego an investment
opportunity, any of which could have a negative effect on fund management or
performance.
Management risk The risk that a strategy used by a fund's management may fail to
produce the intended result. Common to all mutual funds.
Market risk The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than it was worth at an earlier time. Market risk may affect a
single issuer, industry, sector of the economy or the market as a whole. Common
to all stocks and bonds and the mutual funds that invest in them.
Natural event risk The risk of losses attributable to natural disasters, crop
failures and similar events.
Opportunity risk The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in less advantageous
investments.
Political risk The risk of losses attributable to government or political
actions, from changes in tax or trade statutes to governmental collapse and war.
Prepayment risk The risk that unanticipated prepayments may occur during periods
of falling interest rates, reducing the value of mortgage-backed securities.
Valuation risk The risk that a fund has valued certain of its securities at a
higher price than it can sell them for.
Year 2000 risk The risk that the funds' operations could be disrupted by the
year 2000-related computer system problems. Although the adviser and the funds'
service providers are taking steps to address this issue, there may still be
some risk of adverse effects. Common to all mutual funds.
FUND DETAILS 31
<PAGE>
- --------------------------------------------------------------------------------
Higher-risk securities and practices
- --------------------------------------------------------------------------------
This table shows each fund's investment limitations as a percentage of portfolio
assets. In each case the principal types of risk are listed (see previous page
for definitions). Numbers in this table show allowable usage only; for actual
usage, consult the fund's annual/semiannual reports.
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
* No policy limitation on usage; fund may be using currently
o Permitted, but has not typically been used
- -- Not permitted
<TABLE>
<CAPTION>
European Pacific Short-Term
Equity Global Global Inter- Basin Strategic World
Fund Global RX Technology national Equities Income Bond
- ----------------------------------------------------------------------------------------------------------------------------------
Investment practices
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Borrowing; reverse repurchase agreements
The borrowing of money from banks or through
reverse repurchase agreements.
Leverage, credit risks. 33.3 10 33.3 10 33.3 33.3 10 10
Currency trading The direct trading or
holding of foreign currencies as an asset.
Currency risk. * * * * * * * *
Repurchase agreements The purchase of a
security that must later be sold back
to the issuer at the same price plus interest.
Credit risk. * * * * * * * *
Securities lending The lending of securities
to financial institutions, which provide cash
or government securities as collateral.
Credit risk. 33.3 10 33.3 33.3 33.3 33.3 30 30
Short sales The selling of securities which
have been borrowed on the expectation that
the market price will drop.
o Hedged. Hedged leverage, market,
correlation, liquidity, opportunity risks. o -- o -- o o -- --
o Speculative. Speculative leverage, market,
liquidity risks. -- -- o -- o -- -- --
Short-term trading Selling a security soon
after purchase. A portfolio engaging
in short-term trading will have higher
turnover and transaction expenses.
Market risk. * * * * * * * *
When-issued securities and forward commitments
The purchase or sale of securities for
delivery at a future date; market value may
change before delivery. Market, opportunity,
leverage risks. * * * * * * * *
- --------------------------------------------------------------------------------------------------------------------------------
Conventional securities
Foreign debt securities Debt securities
issued by foreign governments or
companies. Credit, currency, interest rate,
market, political risks. 20 5 35(1) 10(2) 35(1) 35(1) *(1) *(1)
Non-investment-grade debt securities Debt
securities rated below BBB/Baa are considered
junk bonds. Credit, market, interest rate,
liquidity, valuation, information risks. -- -- 35 10(2) -- -- 67 35
Restricted and illiquid securities.
Securities not traded on the open market.
May include illiquid Rule 144A securities.
Liquidity, valuation, market risks. 15 15 15 15 15 15 15 15
- --------------------------------------------------------------------------------------------------------------------------------
Unleveraged derivative securities
Asset-backed securities Securities backed
by unsecured debt, such as credit card
debt; these securities are often
guaranteed or over-collateralized to
enhance their credit quality. Credit,
interest rate risks. -- o o o o o * *
Mortgage-backed securities Securities
backed by pools of mortgages, including
pass-through certificates, PACs, TACs
and other senior classes of
collateralized mortgage obligations
(CMOs). Credit, extension, prepayment,
liquidity, interest rate risks. -- o o o o o * *
Participation interests Securities
representing an interest in another
security or in bank loans. Credit,
interest rate, liquidity,
valuation risks. -- -- -- 10(2) -- -- 15(3) 15(3)
</TABLE>
32 FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Higher-risk securities and practices (cont'd)
- ----------------------------------------------------------------------------------------------------------------------------------
European Pacific Short-Term
Equity Global Global Inter- Basin Strategic World
Fund Global RX Technology national Equities Income Bond
- ----------------------------------------------------------------------------------------------------------------------------------
Leveraged derivative securities
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Currency contracts Contracts involving
the right or obligation to buy or sell
a given amount of foreign currency at
a specified price and future date.
o Hedged. Currency, hedged leverage,
correlation, liquidity, opportunity
risks. * * * * * * * *
o Speculative. Currency, speculative
leverage, liquidity risks. * o o o o o o o
Financial futures and options;
securities and index options Contracts
involving the right or obligation to
deliver or receive assets or money
depending on the performance of one or
more assets or an economic index.
o Futures and related options.
Interest rate, currency, market,
hedged or speculative leverage,
correlation, liquidity, opportunity
risks. * * * o * * * *
o Options on securities and indices.
Interest rate, currency, market,
hedged or speculative leverage,
correlation, liquidity, credit,
opportunity risks. * o o o o o o o
Structured securities Indexed
and/or leveraged mortgage-backed
and other debt securities, including
principal-only and interest-only
securities, leveraged floating rate
securities and others. These securities
tend to be highly sensitive to interest
rate movements and their performance
may not correlate to these movements
in a conventional fashion. Credit,
interest rate, extension, prepayment,
market, speculative leverage,
liquidity, valuation risks. -- * * 10(2) * * * *
</TABLE>
(1) No more than 25% of the fund's assets will be invested in securities of
any one foreign government.
(2) Included in the 10% limitation on debt securities.
(3) Included in the 15% limitation on illiquid securities.
- --------------------------------------------------------------------------------
Analysis of funds with 5% or more in junk bonds(1)
- --------------------------------------------------------------------------------
[The table below was represented by a bar chart in the printed materials.]
<TABLE>
<CAPTION>
Quality rating Short-Term Strategic Quality rating World Bond
(S&P/Moody's)(2) Income Fund (S&P/Moody's)(2) Fund
<S> <C> <C> <C> <C> <C>
Invest- AAA/Aaa 40.8% Invest- AAA/Aaa 70.2%
ment- AA/Aa 0.0% ment- AA/Aa 0.0%
Grade A/A 5.4% Grade A/A 0.4%
Bonds BBB/Baa 8.0% Bonds BBB/Baa 0.3%
- ------------------------------------------------------------------------------------------------------
Junk BB/Ba 32.0% Junk BB/Ba 17.9%
Bonds B/B 9.9% Bonds B/B 8.3%
CCC/Caa 0.0% CCC/Caa 0.0%
CC/Ca 0.0% CC/Ca 0.0%
C/C 0.0% C/C 0.0%
D 0.0% D 0.0%
% of portfolio in bonds 96.1% % of portfolio in bonds 97.1%
</TABLE>
o Rated by Standard & Poor's or Moody's Rated by the adviser
(1) Average weighted quality distribution for the most recent fiscal year.
(2) In cases where the S&P and Moody's ratings for a given bond issue do not
agree, the issue has been counted in the higher category.
FUND DETAILS 33
<PAGE>
For more information
- --------------------------------------------------------------------------------
Two documents are available that offer further information on John Hancock
international/global funds:
ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS
Includes financial statements, detailed performance information, portfolio
holdings, a statement from portfolio management and the auditor's report.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds. The
current annual/semiannual report is included in the SAI.
A current SAI has been filed with the Securities and Exchange Commission and is
incorporated by reference (is legally a part of this prospectus). You may visit
the Securities and Exchange Commission's Internet website (www.sec.gov) to view
the SAI, material incorporated by reference and other information.
To request a free copy of the current annual/semiannual report or SAI, please
write or call:
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
Telephone: 1-800-225-5291
EASI-Line: 1-800-338-8080
TDD: 1-800-544-6713
Internet: www.jhancock.com/funds
[LOGO] John Hancock Funds
A Global Investment Management Firm
101 Huntington Avenue
Boston, Massachusetts 02199-7603
John Hancock(R) (C) 1996 John Hancock Funds, Inc.
GLIPN 6/98
