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JOHN HANCOCK GLOBAL FUND
JOHN HANCOCK GLOBAL INCOME FUND
Class A and Class B Shares
Supplement dated May 1, 1995
to Prospectus dated March 1, 1995
The following replaces the paragraph on page 8 entitled "Foreign
Currency Transactions:"
Foreign Currency Transactions. The Fund may enter into forward
currency exchange contracts to hedge against fluctuations in currency exchange
rates, to enhance return or as a substitute for the purchase or sale of
currency. For example, if a portfolio security with an attractive rate of
return is denominated in a currency (including the U.S. dollar) that is not
expected to perform well, a Fund use may forward contracts to offset its
exposure to the non-performing currency while retaining the security. A forward
contract involves an obligation to purchase or sell a specific currency at a
future date at the contract price. There is no limitation on the value of a
Fund's assets that may be committed to forward contracts or on the term of a
forward contract. Forward contracts are subject to the following risks: (1)
that a Fund's performance will be adversely affected by unexpected changes in
currency exchange rates; (2) that the counterparty to a forward contract will
fail to perform its contractual obligations; (3) that a Fund will be unable to
terminate or dispose of its position in a forward contract; and (4) with respect
to hedging transactions in forward contracts, that there will be imperfect
correlation between price changes in the forward contract and price changes in
the hedged portfolio assets.
May 1, 1995
0309S-5/95
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John Hancock Global Fund
John Hancock Global Income Fund
Class A and Class B Shares
Supplement dated May 1, 1995
to Statement of Additional Information dated March 1, 1995
The following replaces Pages 17 and 18:
The Global Fund and the Global Income Fund may enter into forward foreign
currency exchange contracts to enhance return, as a substitute for the
purchase or sale of currency or to hedge against fluctuations in currency
exchange rates. The Funds' hedging transactions in forward contracts may
include the following. A Fund may enter into a contract for the purchase or
sale of a security denominated in a foreign currency to "lock-in" the United
States dollar price of the security. By entering into a forward contract for
a fixed amount of dollars for the purchase or sale of the amount of foreign
currency involved in the underlying transactions, a Fund will be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the United States dollar and that foreign currency during
the period between the date on which the security is purchased or sold and the
date on which payment is made or received.
When the Adviser or JH Advisers International believes that the currency
of a particular foreign country may suffer or enjoy a substantial movement
against another currency, a Fund may enter into a forward contract to sell or
buy the amount of the former foreign currency approximating the value of some
or all of that Fund's portfolio securities denominated in such foreign
currency. This second investment practice is generally referred to as "cross-
hedging." The precise matching of the forward contract amounts and the value
of the securities involved will not generally be possible since the future
value of securities in foreign currencies will change as a consequence of
market movements in the value of these securities between the date on which
the forward contract is entered into and the date it matures. The projection
of short-term currency market movement is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.
In addition, the Funds may enter into forward contracts for non-hedging
purposes. For example, if a portfolio security with an attractive rate of
return is denominated in a currency (including the U.S. dollar) that is not
expected to perform well, a Fund use may forward contracts to offset its
exposure to the non-performing currency while retaining the security.
Under normal circumstances, consideration of the prospects for currency
exchange rates will be incorporated into a Fund's long-term investment
decisions made with regard to overall investment strategies. However, each
Fund believes that it is important to have
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the flexibility to enter into forward contracts when it determines that the
best interests of the Fund will thereby be served. State Street Bank and
Trust Company, the Funds' custodian, will place cash or liquid debt securities
into a segregated account of each Fund in an amount equal to the value of that
Fund's total assets committed to the consummation of forward foreign currency
exchange contracts involving the purchase of foreign currency. If the value
of the securities placed in the segregated account declines, additional cash
or securities will be placed in the account on a daily basis so that the value
of the account will equal the amount of the Fund's commitments with respect to
such contracts.
At the maturity of a forward contract, a Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. There can be no assurance, however, that either Fund will
be able to effect such a closing purchase transaction.
It is impossible to forecast the market value of a particular portfolio
security at the expiration of the contract. Accordingly, it may be necessary
for a Fund to purchase additional foreign currency on the spot market (and
bear the expense of such purchase) if the market value of the security is less
than the amount of foreign currency that the Fund is obligated to deliver and
if a decision is made to sell the security and make delivery of the foreign
currency.
If either the Global Fund or the Global Income Fund retains the portfolio
security and engages in an offsetting transaction, that Fund will incur a gain
or a loss (as described below) to the extent that there has been movement in
forward contract prices. Should forward prices decline during the period
between a Fund's entering into a forward contract for the sale of a foreign
currency and the date it enters into an offsetting contract for the purchase
of the foreign currency, such Fund will realize a gain to the extent that the
price of the currency it has agreed to sell exceeds the price of the currency
it has agreed to purchase. Should forward prices increase, the Fund will
suffer a loss to the extent that the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.
The Funds are not required to enter into forward contracts with regard to
their foreign currency-denominated securities. It also should be realized
that this method of protecting the value of a Fund's portfolio securities
against a decline in the value of a currency does not eliminate fluctuations
in the underlying prices of the securities. It simply establishes a rate of
exchange which one can achieve at some future point in time. Additionally,
although such contracts tend to minimize the risk of loss due to a decline in
the value of the hedged currency, at the same time, they tend to limit any
potential gain which might result should the value of such currency increase.
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Although the Global Fund and the Global Income Fund value their assets
daily in terms of United States dollars, neither Fund intends to convert its
holdings of foreign currencies into United States dollars on a daily basis. A
Fund will do so from time to time, and investors should be aware of the costs
of currency conversion. Although foreign exchange dealers do not charge a fee
for conversion, they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.
The following replaces the first paragraph on Page 26 entitled "Interest Rate
Futures Contracts":
Interest Rate Futures Contracts. The Government Fund, Managed Tax-Exempt
Fund, Gold & Government Fund and Global Income Fund may invest in interest
rate futures contracts and related options that are traded on a United States
or foreign exchange or board of trade.
The following replace the first paragraph on Page 27 entitled "Foreign
Currency Futures Contracts":
Foreign Currency Futures Contracts. The Global Income Fund may invest in
foreign currency futures contracts and related options that are traded on a
United States or foreign exchange or board of trade.
