John Hancock Funds
Global
Fund
SEMI-ANNUAL REPORT
April 30, 1996
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
Douglas M. Costle*
Leland O. Erdahl*
Richard A. Farrell*
William F. Glavin*
John A Moore*
Patti McGill Peterson*
John W. Pratt*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President, Assistant Secretary and
Compliance Officer
James J. Stokowski
Vice President and Treasurer
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
INVESTMENT SUB-ADVISER
John Hancock Advisers International Limited
34 Dover Street
London, England W1X3RA
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
The stock market's record-breaking, whirlwind performance in 1995 will
be a tough act to follow in 1996. In fact, we've already seen greater
market volatility this year, particularly among last year's leaders --
technology stocks. That's to be expected after a year that saw market
indexes soar, including the Standard & Poor's 500-Stock Index's 37%
advance. While many of the same economic conditions that fostered the
stellar 1995 market are still in place -- slow economic growth, muted
inflation and decent corporate earnings -- it would be unrealistic to
expect the market to stage a repeat in 1996. The old saying "trees don't
grow to the sky" comes to mind. Shareholders would do well to temper
expectations of investment returns and perhaps revisit their investment
allocations with their financial advisor to determine if
rebalancing their portfolio makes sense.
No matter how you scale back your market expectations, you should always
be able to count on consistent customer service performance. At John
Hancock Funds, we never stop working to find ways to sustain and improve
the quality of information and assistance we provide you. Our commitment
to this task is no less than John Hancock's loyalty was to his fledgling
country when he is said to have uttered, "if it does the public good,
burn Boston." We won't go that far, of course, but we share our
namesake's dedication to putting the public before all else.
In our case, that public is you, our shareholders. We take very
seriously the role you have entrusted to us, that of helping you achieve
your financial goals. Part of that will always involve good customer
service. So please do not hesitate to call your Customer Service
Representative at 1-800-225-5291 if you have any questions or need
information. We take pride in helping you with the same spirit that John
Hancock displayed at the dawning of America.
Sincerely,
/S/ EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
By David S. Beckwith and John L.F. Wills, Co-Portfolio Managers
John Hancock
Global Fund
Foreign markets narrow gap with United States;
Japan heating up
During the past six months, foreign stocks began performing more in line
with their superior valuations, making up some of the ground lost to
U.S. stocks earlier in 1995. The progress has been most pronounced in
the world's emerging markets, such as Hong Kong, and in Japan, where the
Nikkei Index rose about 25% for dollar-based investors during the
period. As the Japanese economy began to emerge from its long
hibernation, the Fund added more Japanese stocks, doubling its stake
from 12% of net assets six months ago to 25% at the end of April. That
had a positive impact on performance, helping the Fund outperform the
broader market since the beginning of the calendar year. For the entire
six-month period, however, the Fund slightly underperformed its peers
for several reasons. Those included an underweighted stake in U.S.
stocks, which maintained a slim advantage over foreign
markets; the impact of a stronger dollar on the Fund's foreign
investments, which were not hedged against currency fluctuations and
losses suffered late last year on two prominent Scandinavian
telecommunications stocks.
For the six months ended April 30, 1996, the Fund's Class A and Class B
shares had total returns at net asset value of 12.07% and 11.71%,
respectively, compared to 13.70% for the average global fund, according
to Lipper Analytical Services.1 Here's a closer look at the Fund's
performance, region by region.
"... foreign
stocks began
performing
more in line
with their
superior
valuations..."
Europe
As the Fund built up its stake in Japan, European investments as a
percentage of the Fund's total net assets declined slightly from 34% at
the beginning of the period to 27% at the end. We focused on the
region's core economies -- Britain, France and Germany -- which together
accounted for half of the Fund's European investments. A second focus,
albeit to a lesser degree, was Scandinavia. In Britain, whose economic
recovery is leading the rest of Europe, we found attractive
opportunities in consumer stocks, including Dixons Group, an electronics
retailer. In Germany, where the central bank has been reluctant to lower
interest rates despite a stalled economy, we sold the Fund's stake in
Mannesmann, an economically sensitive industrial conglomerate, keeping
only Bayer, a pharmaceutical and chemical company. In Scandinavia, after
Nokia of Finland issued a disappointing earnings report, market
sentiment toward the entire cellular telecommunications sector turned
sour, damaging Ericsson of Sweden as well. So we sold Ericsson during
the period.
Chart with the heading "Top Five Countries" at top left hand column.
The chart lists five holdings 1) Japan 25.1%; 2) United States 20.8%;
3) United Kingdom 10.6%; 4) Hong Kong 7.7%; 5) Australia 7.3%.
Footnote below states "As a percentage of net assets on April 30, 1996."
"... the Fund
built up its
stake in
Japan ..."
Japan
The Japanese economy has shown signs within the last two months of
emerging from a long and difficult recession. Throughout the Japanese
economy, we see the potential for significant earnings gains. There are
growing signs of increased interest in Japan on the part of U.S.
institutional investors looking for the next big global opportunity and
as the markets have turned, Japanese investors have begun showing
renewed interest in local stocks. The weakness of the yen, while
undercutting profits for U.S. dollar-based investors, has been a boon
for exporters of consumer products, including Sony, one of the Fund's
largest Japanese holdings. Bridgestone, the tire company, has profited
from renewed strength in the Japanese auto sector. And Jusco, a
retailer, has received a boost from growing consumer confidence.
United States
Domestic investments as a percentage of the Fund's total net assets
declined slightly during the period, from 27% last October to about 21%
at the end of April. The Fund's second largest U.S. stock is Johnson &
Johnson, the giant drug and consumer products company. It has not done
particularly well lately as the market's attention has shifted from
consumer stocks back to technology stocks. But this is a quality company
that maintains significant competitive advantages, so we're patiently
holding on. Our key technology holding remains America Online, the
leading computer on-line services provider. An addition to the Fund in
recent months included MCI Communications, the long-distance service
provider.
A 2 1/4" x 2" photo of John L.F. Wills at top of right hand column.
Caption reads: "John L.F. Wills, Co-Portfolio Manager."
Emerging markets
Investments in emerging markets totaled 18% of the Fund's net assets at
the end of April. The Fund was less involved in Latin America than in
Southeast Asia, especially Hong Kong, with 8% of the Fund's net assets.
Lower interest rates and a strong local real estate market have been
among the forces driving stock prices higher in Hong Kong for more than
a year. The Fund's largest holdings include Cheung Kong, a conglomerate
with large real estate holdings and Wharf Holdings, another conglomerate
with significant interests in cable television and property development.
Elsewhere in Southeast Asia, the Fund had investments in Singapore's
Keppel, a conglomerate involved in shipping, banking and property
development and Malaysia's Resorts World, a casino and resort operator.
Bar chart with heading "Fund Performance" at top of left hand column.
Under the heading is the footnote: "For the six months ended April 30,
1996." The chart is scaled in increments of 5% from top to bottom, with
15% at the top and 0% at the bottom. Within the chart, there are three
solid bars. The first represents the 12.07% total return for John Hancock
Global Fund: Class A. The second represents the 11.71% total return for
John Hancock Global Fund: Class B. The third represents the 13.70% total
return for the average global fund. Footnote below reads: "Total returns
for John Hancock Global Fund are at net asset value with all distributions
reinvested. The average global fund is tracked by Lipper Analytical
Services.(1) See following page for historical performance information."
A 2 1/4" x 2 3/4" photo of David S. Beckwith at bottom left hand corner.
Caption reads: "David S. Beckwith, Co-Portfolio Manager."
Australia, New Zealand
The Fund has de-emphasized this part of the world lately, going from a
nearly 10% stake in Australia and New Zealand six months ago to about a
7% stake in Australia and nothing in New Zealand by the end of April.
There, our focus was on mining and natural resource stocks, including
Broken Hill Proprietary, a conglomerate; and on two gold stocks,
Newcrest Mining and Plutonic Resources, which have profited from the
recent runup in gold prices.
"... we
continue to
believe
foreign stocks
represent a
significant
long-term
opportunity."
Outlook
We believed last year that given the strong performance of U.S. stocks
in the global arena relative to non-U.S. stocks, foreign stocks would
soon enjoy another day in the sun. After a long fallow period, foreign
markets have shown signs lately of fulfilling the promise contained in
their attractive valuations. Even while foreign stock prices were stuck
in neutral, economic expansion and earnings growth continued unabated,
and ultimately stock prices follow earnings. For that reason, we
continue to believe foreign stocks represent a significant long-term
opportunity. As always, we'll be keeping an eye on interest rates and
inflation. Higher food and energy prices in recent months have raised
some eyebrows, but we're not too concerned. Wages are the key variables
in any inflation equation, and there the trends are positive, thanks to
the expanding global pool of cheap labor.
This commentary reflects the views of the portfolio managers through the
end of the Fund's period discussed in this report. Of course, the
managers' views are subject to change as market and other conditions
warrant.
International investing involves special risks such as currency risks,
political risks and differences in accounting standards and financial
reporting. See prospectus for additional information.
1Figures from Lipper Analytical Services include reinvested dividends
and do not take into account sales charges. Actual load-adjusted
performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Global Fund. Total
return is a performance measure that equals the sum of all income and
capital gain distributions, assuming reinvestment of these distributions
and the change in the price of the Fund's shares, expressed as a
percentage of the Fund's net asset value per share. Performance figures
include the maximum applicable sales charge of 5% for Class A shares.
Prior to August 1992, different sales charges were in effect for Class A
shares and are not reflected in the performance data. The effect of the
maximum contingent deferred sales charge for Class B shares (maximum 5%
and declining to 0% over six years) is included in Class B performance.
Remember that all figures represent past performance and are no
guarantee of how the Fund will perform in the future. Also, keep in mind
that the total return and share price of the Fund's investments will
fluctuate. As a result, your Fund's shares may be worth more or less
than their original cost, depending on when you sell them. Please see
your prospectus for a discussion of the risks associated with
international investing, including currency and political risks and
differences in accounting standards and financial reporting.
CUMULATIVE TOTAL RETURNS
For the period ended March 31, 1996
One Five Life of
Year Years Fund
------ ------- --------
John Hancock
Global Fund: Class A(1) 9.03% N/A 39.26%
John Hancock
Global Fund: Class B(2) 9.02% 58.32% 137.41%
AVERAGE ANNUAL TOTAL RETURNS
For the period ended March 31, 1996
One Five Life of
Year Years Fund
------ ------- --------
John Hancock
Global Fund: Class A(1) 9.03% N/A 8.12%
John Hancock
Global Fund: Class B(2) 9.02% 9.62% 9.44%
Notes to Performance
(1)Class A shares commenced on January 3, 1992.
(2)Class B shares commenced on September 2, 1986.
WHAT HAPPENED TO A $10,000 INVESTMENT
The charts on the right show how much a $10,000 investment in the John
Hancock Global Fund would be worth on April 30, 1996, assuming you had
invested on the day each class of shares started and reinvested all
distributions. For comparison, we've shown the same $10,000 investment
in the Morgan Stanley World Index - an unmanaged index that measures the
performance of a diverse range of global stock markets.
Global Fund
Class A shares
Line chart with the heading Global Fund: Class A, representing the growth
of a hypothetical $10,000 investment over the life of the fund. Within
the chart are three lines.
The first line represents the value of the Morgan Stanley World Index and
is equal to $16,038 as of April 30, 1996. The second line represents the
value of the hypothetical $10,000 investment made in the Global Fund on
January 3, 1992, before sales charge, and is equal to $15,337 as of April
30, 1996. The third line represents the Global Fund after sales charge
and is equal to $14,564 as of April 30, 1996.
Global Fund
Class B shares
Line chart with the heading Global Fund: Class B*, representing the
growth of a hypothetical $10,000 investment over the life of the fund.
Within the chart are two lines.
The first line represents the value of the Morgan Stanley World Index
and is equal to $27,133 as of April 30, 1996. The second line represents
the value of the hypothetical $10,000 investment made in the Global Fund
on September 2, 1986, before contingent deferred sales charge, and is
equal to $24,803 as of April 30, 1996.
*No contingent deferred sales charge applicable.
<TABLE>
<CAPTION>
Financial Statements
John Hancock Funds - Global Fund
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on April 30, 1996.
You'll also find the net asset value and the maximum offering price per
share as of that date.
Statement of Assets and Liabilities
April 30, 1996 (Unaudited)
- ---------------------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $95,691,972) $124,218,351
Foreign currency, at value (cost - $951,471) 950,651
Receivable for shares sold 6,231
Receivable for investments sold 2,111,032
Dividends receivable 356,609
Foreign tax receivable 128,328
Prepaid expenses 8,584
-------------
Total Assets 127,779,786
- ---------------------------------------------------------------------------------
Liabilities:
Temporary overdraft of cash 337,240
Payable for foreign currency purchased 1,662
Payable for shares repurchased 37,958
Payable for investments purchased 222,500
Foreign tax payable 152,967
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 109,521
Accounts payable and accrued expenses 111,112
-------------
Total Liabilities 972,960
- ---------------------------------------------------------------------------------
Net Assets:
Capital paid-in 92,686,580
Accumulated net realized gain on investments
and foreign currency transactions 6,224,622
Net unrealized appreciation of investments
and foreign currency transactions 28,391,063
Net investment loss (495,439)
-------------
Net Assets $126,806,826
=================================================================================
Net Asset Value Per Share:
(Based on net asset values and shares of
beneficial interest outstanding - unlimited
number of shares authorized with no par
value, respectively)
Class A - $99,605,912 / 7,527,345 $13.23
=================================================================================
Class B - $27,200,914 / 2,118,458 $12.84
=================================================================================
Maximum Offering Price Per Share *
Class A - ($13.23 x 105.26%) $13.93
=================================================================================
* On single retail sales of less than $50,000. On sales of
$50,000 or moreand on group sales the offering price is reduced.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income earned
and expenses incurred in operating the Fund. It also shows net gains (losses)
for the period stated.
Statement of Operations
Six months ended April 30, 1996 (Unaudited)
- ---------------------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding taxes of $66,748) $661,450
Interest 60,475
-------------
721,925
-------------
Expenses:
Investment management fee - Note B 578,872
Distribution/service fee - Note B
Class A 142,090
Class B 120,438
Transfer agent fee - Note B 214,033
Custodian fee 83,850
Printing 23,660
Registration and filing fees 21,207
Auditing fee 18,025
Trustees' fees 9,675
Miscellaneous 3,096
Legal fees 2,418
-------------
Total Expenses 1,217,364
- ---------------------------------------------------------------------------------
Net Investment Loss (495,439)
- ---------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 6,427,130
Net realized loss on foreign currency transactions (202,638)
Change in net unrealized appreciation/depreciation
of investments 8,261,944
Change in net unrealized appreciation/depreciation
of foreign currency transactions (110,238)
-------------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency
Transactions 14,376,198
- ---------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $13,880,759
=================================================================================
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995
---------- -----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($495,439) ($455,315)
Net realized gain on investments sold and
foreign currency transactions 6,224,492 7,707,727
Change in net unrealized appreciation/
depreciation of investments and foreign
currency transactions 8,151,706 (8,441,382)
---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 13,880,759 (1,188,970)
---------- -----------
Distributions to Shareholders:
Distributions from net realized gain
on investments sold and foreign currency
transactions
Class A - ($0.8842 and $1.3307
per share, respectively) (6,456,700) (9,441,512)
Class B - ($0.8842 and $1.3307
per share, respectively) (1,721,683) (3,043,184)
Class C** - (none and $1.3307
per share, respectively) -- (73,482)
---------- -----------
Total Distributions to Shareholders (8,178,383) (12,558,178)
---------- -----------
From Fund Share Transactions - Net* 2,937,128 (1,632,583)
---------- -----------
Net Assets:
Beginning of period 118,167,322 133,547,053
---------- -----------
End of period (including net investment
loss of $495,439 and none, respectively) $126,806,826 $118,167,322
========== ===========
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
APRIL 30, 1996 YEAR ENDED OCTOBER 31,
(UNAUDITED) 1995
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- -----------
CLASS A
Shares sold 1,096,038 $14,017,827 881,102 $10,949,764
Shares issued to shareholders in reinvestment
of distributions 516,733 6,236,969 781,667 9,168,928
---------- ----------- ---------- -----------
1,612,771 20,254,796 1,662,769 20,118,692
Less shares repurchased (1,472,373) (18,799,995) (1,407,258) (17,445,162)
---------- ----------- ---------- -----------
Net increase 140,398 $1,454,801 255,511 $2,673,530
========== =========== ========== ===========
CLASS B
Shares sold 276,750 $3,357,355 546,939 $6,634,570
Shares issued to shareholders in reinvestment
of distributions 134,330 1,577,033 239,739 2,759,391
---------- ----------- ---------- -----------
411,080 4,934,388 786,678 9,393,961
Less shares repurchased (280,608) (3,452,061) (1,082,302) (13,070,250)
---------- ----------- ---------- -----------
Net increase (decrease) 130,472 $1,482,327 (295,624) ($3,676,289)
========== =========== ========== ===========
CLASS C**
Shares sold 10,813 $130,313
Shares issued to shareholders in reinvestment
of distributions 6,201 73,482
---------- -----------
17,014 203,795
Less shares repurchased (69,733) (833,619)
---------- -----------
Net decrease (52,719) ($629,824)
========== ===========
** All Class C shares were redeemed on March 31, 1995.
The Statement of Changes in Net Assets shows how the value of the Fund's net
assets has changed since the end of the previous period. The difference
reflects earnings less expenses, any investment gains and losses, distributions
paid to shareholders, and any increase or decrease in the amount of money
shareholders invested in the Fund. The footnote illustrates the number of
Fund shares sold, reinvested and redeemed during the last two periods, along
with the corresponding dollar values.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
the period indicated, investment returns, key ratios and supplemental
data are listed as follows:
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
April 30, 1996 -----------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
CLASS A (a)
Per Share Operating Performance
Net Asset Value, Beginning of Period $12.67 $14.16 $14.30 $10.55 $11.31
------- ------- ------- ------- -------
Net Investment Loss (0.04) (0.03)(b) ( 0.07)(b) ( 0.10)(b) (0.04)(b)
Net Realized and Unrealized Gain
(Loss) on Investments
and Foreign Currency Transactions 1.48 (0.13) 1.24 3.85 (0.72)
------- ------- ------- ------- -------
Total from Investment Operations 1.44 (0.16) 1.17 3.75 (0.76)
------- ------- ------- ------- -------
Less Distributions:
Distributions from Net Realized Gain
on Investments Sold
and Foreign Currency Transactions (0.88) (1.33) (1.31) -- --
------- ------- ------- ------- -------
Net Asset Value, End of Period $13.23 $12.67 $14.16 $14.30 $10.55
======= ======= ======= ======= =======
Total Investment Return at Net Asset
Value (d) 12.07%(f) (0.37%) 8.64% 35.55% (6.72%)
Ratios and Supplemental Data
Net Assets, End of Period (000's
omitted) $99,606 $93,597 $100,973 $90,787 $76,980
Ratio of Expenses to Average Net
Assets 1.89%* 1.87% 1.98% 2.12% 2.47%*
Ratio of Net Investment Loss to
Average Net Assets ( 0.69%)* (0.23%) (0.54%) (0.86%) (0.60%)*
Portfolio Turnover Rate 40% 60% 61% 108% 69%
Average Broker Commission Rate
(per share of security) (g) $0.02 N/A N/A N/A N/A
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $12.36 $13.93 $14.17 $10.50 $10.92 $9.94
------- ------- ------- ------- ------- ------
Net Investment Loss (0.08) (0.11)(b) (0.15)(b) (0.15)(b) (0.12)(b) (0.01)(b)
Net Realized and Unrealized Gain
(Loss) on Investments
and Foreign Currency Transactions 1.44 (0.13) 1.22 3.82 (0.30) 0.35
------- ------- ------- ------- ------- ------
Total from Investment Operations 1.36 (0.24) 1.07 3.67 (0.42) 1.34
------- ------- ------- ------- ------- ------
Less Distributions:
Dividends from Net Realized Gain
on Investments Sold
and Foreign Currency Transactions (0.88) (1.33) (1.31) -- -- (0.36)
------- ------- ------- ------- ------- ------
Net Asset Value, End of Period $12.84 $12.36 $13.93 $14.17 $10.50 $10.92
======= ======= ======= ======= ======= ======
Total Investment Return at Net
Asset Value (d) 11.71%(f) (1.01%) 7.97% 34.95% (3.85%) 14.04%
Ratios and Supplemental Data
Net Assets, End of Period
(000's omitted) $27,201 $24,570 $31,822 $19,340 $11,475 $28,686
Ratio of Expenses to Average
Net Assets 2.55%* 2.57% 2.59% 2.49% 2.68%* 2.60%
Ratio of Net Investment Loss
to Average Net Assets ( 1.35%)* (0.89%) (1.12%) (1.25%) (1.03%) (0.12%)
Portfolio Turnover Rate 40% 60% 61% 108% 69% 106%
Average Broker Commission Rate
(per share of security) (g) $0.02 N/A N/A N/A N/A N/A
<CAPTION>
PERIOD ENDED YEAR ENDED OCTOBER 31,
MARCH 31, 1995 ---------------------
(UNAUDITED) 1994 1993
------- ------- -------
<S> <C> <C> <C>
CLASS C (c)
Per Share Operating Performance
Net Asset Value, Beginning of Period $14.27 $14.34 $11.75
------- ------- -------
Net Investment Loss -- -- (0.02)
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions (0.97) 1.24 2.61
------- ------- -------
Total from Investment Operations (0.97) 1.24 2.59
------- ------- -------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and Foreign Currency
Transactions (1.33) (1.31) --
------- ------- -------
Net Asset Value, End of Period $11.97 $14.27 $14.34
======= ======= =======
Total Investment Return at Net
Asset Value (d) ( 6.70%)(f) 9.15% $22.04%
Ratios and Supplemental Data
Net Assets, End of Period
(000's omitted) $795 $752 $406
Ratio of Expenses to Average
Net Assets 1.37%* 1.42% 1.43%*
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.06%* 0.03% (0.35%)*
Portfolio Turnover Rate 60%(e) 61% 108%
* On an annualized basis.
(a) Class A shares commenced operations on January 3, 1992.
(b) On average month end shares outstanding.
(c) Class C shares commenced operations on May 7, 1993. Net asset value and net assets at
the end of the period reflect amounts prior to the redemption of all shares on March 31, 1995.
(d) Total investment return assumes dividend reinvestment and does not reflect the effect of
sales charges.
(e) For the year ended October 31, 1995.
(f) Not annualized
(g) Average Broker Commission Rate (per share of security) as required by amended disclosure
requirements effective September 1, 1995.
The Financial Highlights summarizes the impact of the following factors on a single share for
the period indicated: net investment income, gains (losses), distributions and total investment
return of the Fund. It shows how the Fund's net asset value for a share has changed since the
end of the previous period. Additionally, important relationships between some items presented
in the financial statements are expressed in ratio form.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
The Schedule of Investments is a complete list of all securities owned by the
Global Fund on April 30, 1996. The main category is common stocks, which are
further broken down by country.
Schedule of Investments
April 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------------
NUMBER MARKET
ISSUER, DESCRIPTION OF SHARES VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
Argentina (0.56%)
Disco S.A., American Depositary
Receipts (ADR) (Retail)* 45,000 $714,375
------------
Australia (7.33%)
Boral Ltd. (Building Products) 750,000 1,956,009
Broken Hill Proprietary Co., Ltd.
(Diversified Operations) 131,500 2,023,633
Newcrest Mining Ltd.
(Gold Mining & Products) 350,000 1,685,389
Plutonic Resources Ltd.
(Gold Mining & Products) 315,000 1,917,714
RGC Ltd. (Metal Processing & Products) 323,900 1,712,370
------------
9,295,115
------------
Brazil (1.07%)
Telecomunicacoes Brasileiras S/A
(ADR) (Telecommunications) 25,000 1,353,125
------------
Chile(1.13%)
Santa Isabel S.A., (ADR) (Retail)* 49,600 1,432,200
------------
Finland (1.23%)
Nokia AB (Telecommunications) 43,500 1,554,085
------------
France (3.04%)
LVMH Moet Henessey Louis Vuitton
(Beverages) 9,250 2,366,425
Societe Nationale Elf Aquitaine
(Oil & Gas) 20,000 1,487,373
------------
3,853,798
------------
Germany (1.02%)
Bayer AG (Chemicals) 4,000 1,288,131
------------
Hong Kong (7.69%)
Cheung Kong (Holdings) Ltd.
(Real Estate) 325,000 2,321,279
CITIC Pacific Ltd. (Diversified Operations) 500,000 1,964,967
HSBC Holdings Ltd. (Banks) 100,200 1,496,102
Swire Pacific Ltd.
(Diversified Operations) 200,000 1,706,419
Wharf Holdings Ltd.
(Diversified Operations) 610,000 2,259,259
------------
9,748,026
------------
Japan (25.01%)
Bridgestone Corp. (Automobile/Trucks) 153,000 $2,837,532
Fanuc Ltd. (Machinery) 45,000 1,957,363
Itochu Corp. (Diversified Operations) 300,000 2,285,742
Jusco Co., Ltd (Retail) 70,000 2,168,156
Matsushita Electric Industrial Co., Ltd.
(Electronics) 160,000 2,829,693
Matsushita-Kotobuki Electronics
Industries, Ltd. (Electronics) 102,000 2,730,271
Mitsubishi Heavy Industries, Ltd.
(Machinery) 270,000 2,410,783
Nippon Television Network Corp.
(Broadcasting) 7,300 2,295,971
Oki Electric Industry Co., Ltd.
(Telecommunications) 150,000 1,190,192
Rohm Co., Ltd. (Electronics) 20,800 1,324,296
Sanwa Bank Ltd. (Banks) 110,000 2,229,339
Sony Corp. (Electronics) 42,000 2,730,271
Sony Music Entertainment Inc.
(Electronics) 45,000 2,439,176
TDK Corp. (Electronics) 40,000 2,290,522
------------
31,719,307
------------
Korea (0.23%)
Korea Housing Bank (Banks)* 10,300 293,813
------------
Luxembourg (1.00%)
Scandinavian Broadcasting System (ADR)
(Broadcasting)* 55,000 1,271,875
------------
Malaysia (1.43%)
Resorts World Berhad
(Leisure & Recreation) 300,000 1,816,869
------------
Mexico (0.54%)
Telefonos de Mexico S.A. de C.V. (ADR)
(Telecommunications) 20,000 680,000
------------
Netherlands (2.40%)
Gucci Group N V
(Shoes & Related Apparel)* 30,000 $1,631,250
Polygram N.V. (Audio/Video) 8,000 476,218
Polygram N.V. (ADR) (Audio/Video) 16,000 938,000
------------
3,045,468
------------
Norway (1.88%)
Hafslund Nycomed AS (Drugs) 81,000 2,379,597
------------
Pakistan (0.06%)
Crescent Textile Mills (Textile)* 119,701 79,306
------------
Philippines (0.58%)
Alsons Cement Corp.
(Building Products)* 1,581,000 740,055
------------
Singapore (2.55%)
Keppel Corp. (Diversified Operations) 218,000 1,969,412
United Overseas Bank Ltd. (Banks) 130,000 1,266,894
------------
3,236,306
------------
Spain (1.59%)
Repsol SA (Oil & Gas) 55,000 2,017,099
------------
Sweden (2.73%)
Investor AB (Diversified Operations) 47,500 1,898,151
Telefonaktiebolaget (LM) Ericsson
(Telecommunications) 77,000 1,561,210
------------
3,459,361
------------
Switzerland (1.83%)
Ciba-Geigy AG (Drugs) 2,000 2,321,198
------------
Thailand (1.72%)
Bangkok Bank (Banks) 150,000 2,174,731
------------
United Kingdom (10.59%)
British Petroleum Co. PLC (Oil & Gas) 285,000 2,571,993
Burton Group PLC (Retail) 1,000,000 2,348,337
Dixons Group PLC (Retail) 425,000 3,154,072
Glaxo Wellcome PLC (Drugs) 200,000 2,425,109
Millennium & Copthorne Hotels PLC
(Hotels & Motels)* 175,000 840,358
Thorn EMI PLC (Leisure & Recreation) 75,500 2,094,065
------------
13,433,934
------------
United States (20.75%)
Adaptec, Inc. (Computers)* 25,000 1,437,500
American Online, Inc. (Computers)* 44,000 2,816,000
BMC Software, Inc. (Computers)* 25,000 1,521,875
Cairn Energy USA, Inc. (Oil & Gas)* 35,000 433,125
Cisco Systems, Inc. (Computers)* 48,000 2,490,000
CUC International Inc. (Retail)* 50,625 1,664,297
Disney (Walt) Co. (The)
(Leisure & Recreation) 32,093 1,989,766
Eagle River Interactive, Inc.
(Advertising)* 55,400 1,191,100
Home Depot, Inc. (The) (Retail) 35,000 1,658,125
Intuit, Inc. (Computers)* 20,000 1,040,000
Johnson & Johnson (Drugs) 30,000 2,775,000
MCI Communications Corp.
(Telecommunications) 40,000 1,177,500
Oxford Health Plans, Inc. (Healthcare)* 24,000 1,212,000
Tommy Hilfiger Corp. (Retail)* 39,400 1,792,700
Viacom, Inc. (Class B) (Broadcasting)* 30,307 1,242,587
WorldCom, Inc. (Telecommunications)* 39,766 1,869,002
------------
26,310,577
------------
TOTAL COMMON STOCKS
(Cost $95,691,972) (97.96%) 124,218,351
------------
TOTAL INVESTMENTS (97.96%) $124,218,351
======= ============
* Non-income producing security.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
The Fund primarily invests in securities issued by companies of other
countries. The performance of the Fund is closely tied to the economic
conditions within the countries it invests. The concentration of investments
by country for individual securities held by the Fund is shown in the schedule
of investments. In addition, the concentration of investments can be aggregated
by various industry groups. The table below shows the percentages of the Fund's
investments at April 30, 1996 assigned to the various investment categories.
Industry Diversification (Unaudited)
- -----------------------------------------------------------------------
MARKET VALUE OF SECURITIES AS A
INVESTMENT CATEGORIES % OF FUND NET ASSETS
- --------------------------- -------------------------------
<S> <C>
Advertising 0.94%
Audio/Video 1.11
Automobile/Trucks 2.24
Banks 5.88
Beverages 1.87
Broadcasting 3.79
Building Products 2.13
Chemicals 1.02
Computers 7.34
Diversified Operations 11.13
Drugs 7.81
Electronics 11.31
Gold Mining & Products 2.84
Healthcare 0.96
Hotels & Motels 0.66
Leisure & Recreation 4.65
Machinery 3.44
Metal Processing & Products 1.35
Oil & Gas 5.13
Real Estate 1.83
Retail 11.78
Shoes & Related Apparel 1.29
Telecommunications 7.40
Textile 0.06
--------
TOTAL INVESTMENTS 97.96%
=======
See notes to financial statements
</TABLE>
Notes to Financial Statements
John Hancock Funds - Global Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
Freedom Investment Trust II (the "Trust") is an open-end management
investment company, registered under the Investment Company Act of 1940.
The Trust consists of five series portfolios: John Hancock Global Fund
(the "Fund"), John Hancock Special Opportunities Fund, John Hancock
Global Income Fund, John Hancock Short-Term Strategic Income Fund and
John Hancock International Fund. The investment objective of the Fund is
to achieve long-term growth of capital primarily through investment in
common stocks of companies domiciled in foreign countries and the United
States.
The Trustees have authorized the issuance of multiple classes of the
Fund, designated as Class A and Class B shares. The shares of each class
represent an interest in the same portfolio of investments of the Fund
and have equal rights to voting, redemption, dividends, and liquidation,
except that certain expenses, subject to the approval of the Trustees,
may be applied differently to each class of shares in accordance with
current regulations of the Securities and Exchange Commission and the
Internal Revenue Service. Shareholders of a class which bears
distribution/service expenses under the terms of a distribution plan,
have exclusive voting rights regarding such distribution plan.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued
on the basis of market quotations, valuations provided by independent
pricing services or, at fair value as determined in good faith in
accordance with procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost which
approximates market value. All portfolio transactions initially
expressed in terms of foreign currencies have been translated into U.S.
dollars as described in "Foreign Currency Translation" below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with John
Hancock Advisers, Inc. (the "Adviser"), a wholly-owned subsidiary of The
Berkeley Financial Group, may participate in a joint repurchase
agreement transaction. Aggregate cash balances are invested in one or
more repurchase agreements, whose underlying securities are obligations
of the U.S. government and/or its agencies. The Fund's custodian bank
receives delivery of the underlying securities for the joint account on
the Fund's behalf. The Adviser is responsible for ensuring that the
agreement is fully collateralized at all times.
FEDERAL INCOME TAXES The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all of its taxable
income, including any net realized gain on investment, to its
shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, net currency exchange gains and losses
from sales of foreign debt securities must be treated as ordinary income
even though such items are gains and losses for accounting purposes.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the
date of purchase, sale or maturity. Net realized gains and losses on
sales of investments are determined on the identified cost basis.
Capital gains realized on some foreign securities are subject to foreign
taxes and are accrued, as applicable.
DIVIDENDS, INTEREST AND DISTRIBUTIONS Dividend income on investment
securities is recorded on the ex-dividend date or, in the case of some
foreign securities, on the date thereafter when the Fund is made aware
of the dividend. Interest income on investment securities is recorded on
the accrual basis. Foreign income may be subject to foreign withholding
taxes which are accrued as applicable.
The fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with income tax regulations, which may
differ from generally accepted accounting principles. Dividends paid by
the Fund with respect to each class of shares will be calculated in the
same manner, at the same time and will be in the same amount, except for
the effect of expenses that may be applied differently to each class as
explained previously.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual Fund. Expenses which are not readily
identifiable to a specific Fund are allocated in such a manner as deemed
equitable, taking into consideration, among other things, the nature and
type of expense and the relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized
gains (losses) are calculated at the Fund level and allocated daily to
each class of shares based on the appropriate net assets of the
respective classes. Distribution/service fees if any, are calculated
daily at the class level based on the appropriate net assets of each
class and the specific expense rate(s) applicable to each class.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues, and expenses of the Fund.
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially
expressed in terms of foreign currencies are translated into U.S.
dollars based on London currency exchange quotations as of 5:00 p.m.,
London time, on the date of any determination of the net asset value of
the Fund. Transactions affecting statement of operations accounts and
net realized gain/(loss) on investments are translated at the rates
prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
or losses arise from changes in the value of assets and liabilities
other than investments in securities at fiscal year end, resulting from
changes in the exchange rate.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into
forward foreign currency exchange contracts as a hedge against the
effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date at a set price. The aggregate
principal amounts of the contracts are marked-to-market daily at the
applicable foreign currency exchange rates. Any resulting unrealized
gains and losses are included in the determination of the Fund's daily
net assets. The Fund records realized gains and losses at the time the
forward foreign currency contract is closed out or offset by a matching
contract. Risks may arise upon entering these contracts from potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities. The Fund may also purchase and sell forward contracts to
facilitate the settlement of foreign currency denominated portfolio
transactions, under which it intends to take delivery of the foreign
currency. Such contracts normally involve no market risk other than that
offset by the currency amount of the underlying transaction.
At April 30, 1996, there were no open forward foreign currency exchange
contracts.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects
of fluctuations in interest rates, currency exchange rates and other
market conditions. At the time the Fund enters into a financial futures
contract, it is required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin,"
equal to a certain percentage of the value of the financial futures
contract being traded. Each day, the futures contract is valued at the
official settlement price of the board of trade or U.S. commodities
exchange. Subsequent payments, known as "variation margin," to and from
the broker are made on a daily basis as the market price of the
financial futures contract fluctuates. Daily variation margin
adjustments, arising from this "mark to market," are recorded by the
Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there
may be an illiquid market and/or that a change in the value of the
contract may not correlate with changes in the value of the underlying
securities.
For Federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures
contracts.
At April 30, 1996, there were no open positions in financial futures
contracts.
NOTE B --
MANAGEMENT FEE, AND
TRANSACTIONS WITH AFFILIATES AND OTHERS
The Adviser is solely responsible for advising the Fund with respect to
investments in the United States and Canada. The Fund and the Adviser
also have a sub-investment management contract with John Hancock
Advisers International Limited (the "Sub-Adviser"), a wholly-owned
subsidiary of the Adviser, under which the Sub-Adviser, subject to the
review of the Trustees and overall supervision of the Adviser, provides
the Fund with investment management services and advice with respect to
the portion of the Fund's assets invested in countries other than the
United States and Canada.
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser, for a continuous investment
program equivalent, on an annual basis, to the sum of: (a) 1.00% of the
first $100,000,000 of the Fund's average daily net asset value, (b)
0.80% of the next $200,000,000, (c) 0.75% of the next $200,000,000 and
(d) 0.625% of the Fund's average daily net asset value in excess of
$500,000,000. The Adviser pays the Sub-Adviser a fee equivalent, on an
annual basis to the sum of (a) 0.70% of the first $200,000,000 of the
Fund's average daily net asset value and (b) 0.6375% of the Fund's
average daily net asset value in excess of $200,000,000. The Fund is not
responsible for the payment of the Sub-Adviser's fee.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive
state limit where the Fund is registered to sell shares of beneficial
interest, the fee payable to the Adviser will be reduced to the extent
of such excess, and the Adviser will make additional arrangements
necessary to eliminate any remaining excess expenses. The current limits
are 2.5% of the first $30,000,000 of the Fund's average daily net asset
value, 2.0% of the next $70,000,000 and 1.5% of the remaining average
daily net asset value.
John Hancock Funds, Inc. ("JH Funds"), a wholly owned subsidiary of the
Adviser, and Freedom Distributors Corporation ("FDC") act as Co-
Distributors for shares of the Fund. For the period ended April 30,
1996, net sales charges received with regard to sales of Class A shares
amounted to $78,655. Out of this amount, $11,909 was retained and used
for printing prospectuses, advertising, sales literature and other
purposes, $22,184 was paid as sales commissions to unrelated broker-
dealers and $44,562 was paid as sales commissions to sales personnel of
John Hancock Distributors, Inc. ("Distributors"), Tucker Anthony,
Incorporated ("Tucker Anthony") and Sutro & Co., ("Sutro"), all of which
are broker dealers. The Adviser's indirect parent, John Hancock Mutual
Life Insurance Company, is the indirect sole shareholder of Distributors
and John Hancock Freedom Securities Corporation and its subsidiaries
which include FDC, Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining
rates beginning at 5.0% of the lesser of the current market value at the
time of redemption or the original purchase cost of the shares being
redeemed. Proceeds from CDSC are paid to JH Funds and are used in whole
or in part to defray its expenses related to providing distribution
related services to the Fund in connection with the sale of Class B
shares. For the period ended April 30, 1996, contingent deferred sales
charges paid to JH Funds amounted to $29,432.
In addition, to compensate the Co-Distributors for the services they
provide as distributors of shares of the Fund, the Fund has adopted
Distribution Plans with respect to Class A and Class B pursuant to Rule
12b-1 under the Investment Company Act of 1940. Accordingly, the Fund
will make payments to the Co-Distributors for distribution and service
expenses, at an annual rate not exceed 0.30% of Class A average daily
net assets and 1.00% of Class B average daily net assets to reimburse
the Co-Distributors for their distribution/service costs. Up to a
maximum of 0.25% of such payments may be service fees as defined by the
amended Rules of Fair Practice of the National Association of Securities
Dealers. Under the amended Rules of Fair Practice, curtailment of a
portion of the Fund's 12b-1 payments could occur under certain
circumstances. In order to comply with this rule, the 12b-1 fee was
decreased on Class B shares to 0.95% for the peiod November 1, 1995
through March 31, 1996, and increased to 1.00% effective April 1, 1996.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned subsidiary of
The Berkeley Financial Group. The Fund pays transfer agent fees based on
the number of shareholder accounts and certain out-of-pocket expenses.
Mr. Edward J. Boudreau, Jr. is a director and/or officer of the Adviser
and/or its affiliates, as well as a Trustee of the Fund. The
compensation of unaffiliated Trustees is borne by the Fund. Effective
with the fees paid for 1995, the unaffiliated Trustees may elect to
defer for tax purposes their receipt of this compensation under the John
Hancock Group of Funds Deferred Compensation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover its
liability for the deferred compensation. Investments to cover the Fund's
deferred compensation liability are recorded on the Fund's books as an
other asset. The deferred compensation liability and the related other
asset are always equal and are marked to market on a periodic basis to
reflect any income earned by the investment as well as any unrealized
gains or losses. At April 30, 1996, the Fund's investments to cover the
deferred compensation liability had unrealized appreciation of $362.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than other than
obligations of the U.S. government and its agencies and short-term
securities, during the period ended April 30, 1996 aggregated
$46,633,127 and $52,793,442, respectively. There were no purchases or
sales of obligations of the U.S. government and its agencies during the
period ended April 30, 1996.
The cost of investments owned at April 30, 1996 for Federal income tax
purposes was $95,691,972. Gross unrealized appreciation and depreciation
of investments aggregated $30,586,086 and $2,059,707, respectively,
resulting in net unrealized appreciation of $28,526,379.
A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a circle
in upper right, a cube in lower left and a diamond in lower right. A tag
line below reads: "A Global Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
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PAID
Brockton, MA
Permit No. 582
This report is for the information of shareholders of the John Hancock
Global Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
A recycled logo in lower left hand corner with the caption "
Printed on Recycled Paper."
030SA 4/96
6/96
- ----------------------------------------------------------------------------
