<PAGE> 1
JOHN HANCOCK FUNDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
GLOBAL
FUND
ANNUAL REPORT
October 31, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
William A. Barron, III*
Douglas M. Costle*
Leland O. Erdahl*
Richard A. Farrell*
William F. Glavin*
Patrick Grant*
Ralph Lowell, Jr.*
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 andDorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Price Waterhouse llp
160 Federal Street
Boston, Massachusetts 02110
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
[A 1 1/4" photo of Edward J. Boudreau Jr., Chairman and Chief Executive Officer,
flush right, next to first paragraph.]
Investors around the world have been watching Wall Street in awe for the better
part of 1995. Through October, the Standard & Poor's 500-Stock Index, a
widely-used barometer of stock performance, had grown by more than 25%.
Investors who stayed in the market after a disappointing 1994 have been
rewarded.
On another street, Pennsylvania Avenue, one of the hot topics many people
are watching is Medicare reform. While there's no clear-cut solution on the
horizon, today's Medicare debate should serve as another wake-up call to all
Americans about the need to have a financial plan and to save for retirement.
Whether or not the government changes the way health-care benefits are allotted
to senior citizens, the message is clear: your future security and well-being
lies in your own hands -- not Uncle Sam's.
We know you've heard it a hundred times. Pick up almost any financial
periodical today, and you'll see cover stories on retirement. Many of them will
perhaps scare you or make you think that the task of saving for retirement is
just too daunting. But take heart. We don't believe that and neither do many
financial experts.
Yet retirement planning is not to be taken lightly. To live the way you
want to -- the way you deserve to after all those years of hard work -- you need
to plan and save now, on a regular basis, no matter what your other costs, no
matter how small the amount, no matter what your current age. It may be easier
if you start earlier, but it's never too late.
Building a secure nest egg is indeed doable. Talk to your financial adviser
about establishing your retirement planning roadmap, if you haven't already. And
educate yourself by reading some of the many articles about how to save for
retirement. Take control of your future by saving today. That way, when it comes
time for retirement, you shouldn't have to think about any street but Easy
Street.
Sincerely,
/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY DAVID S. BECKWITH FOR THE PORTFOLIO MANAGEMENT TEAM
JOHN HANCOCK
GLOBAL FUND
Surging U.S. market leaves many foreign markets behind
Declining interest rates, low inflation and steady corporate earnings in 1995
created nearly ideal market conditions in the United States, attracting
investors from all over the world and propelling domestic stocks to record
highs. The gains came at the expense of foreign stocks. Europe lagged for
reasons that had less to do with the investment climate -- which was positive --
than with the comparative allure of domestic stocks, especially technology
issues. In Japan, it seemed as if every time the market went up, the yen went
down, wiping out gains for U.S. investors. Emerging markets, meanwhile,
recovered strongly after a disastrous fourth quarter of 1994, only to fall back
again late in the period. The upshot was a disappointing year for global
investors, who did well to break even.
John Hancock Global Fund lagged its peers, producing total returns at net
asset value of another -- 0.37% and another -- 1.01% for its Class A and Class B
shares, respectively, during the year that ended October 31, 1995. That compared
to 5.18% for the average global fund, according to Lipper Analytical Services.1
There were three main reasons that the Fund lagged during the period. First was
our large stake in emerging markets, which hurt the Fund early in the period.
Second was our underweighting in U.S. stocks, which totaled only about 20% of
the Fund's net assets for much of the period. And third was our relative
overexposure to Japan and other countries in the Pacific Rim.
[A 2 1/2" x 3 3/4" photo of David Beckwith at bottom right. Caption reads:
"DAVID S. BECKWITH"]
EUROPE: IN THE SHADOW OF THE U.S.
We ended the period with about 34% of the Fund's net assets in European stocks,
up from 25% a year ago but little
[CAPTION]
"...A DISAPPOINTING YEAR FOR GLOBAL INVESTORS..."
3
<PAGE> 4
John Hancock Funds - Global Fund
[Chart with heading "Top Five Countries" at top of left hand column. The chart
lists five countries: 1) United States 28.5% 2) Japan 11.7% 3) United Kingdom
7.3% 4) Australia 7.1% 5) Hong Kong 6.1%. A footnote below reads "As a
percentage of net assets on October 31, 1995."]
changed during the past six months. There was value in Europe this past year for
those who cared to notice it. Many stocks were trading at price-to-earnings
ratios that looked positively cheap compared to their U.S. counterparts. But all
that was overshadowed by the bull market in the United States. All the same,
there were pockets of strong performance in Europe, notably the United Kingdom,
where the Fund had a 7% stake at the end of the period, and Scandinavia. We made
money on a number of so-called soft cyclicals, which are stocks that tend to do
well in the latter stages of an economic recovery. Those included three U.K.
stocks: Thorn EMI, a music retailer and record company; Reed International, a
publisher; and Carlton Communications, a broadcaster. Another U.K. stock that's
done well is Glaxo Wellcome, a drug company which recently settled a threat to
one of its most important products from a generic competitor. Orkla, a Norwegian
conglomerate involved with consumer products and financial services, rose on
strong earnings growth. Investor AB, a Swedish company that owns half of Saab
Moters, was a steady, if unspectacular, performer.
UNITED STATES: LEADING THE WAY
Late this past summer, we took about 10% of the Fund's net assets out of markets
such as Malaysia and Singapore and transferred them to the United States, where
we bought a mix of media, technology, retail and health-care stocks. Some of
those stocks have since become strong performers, notably America Online, the
leading commercial provider of computer online services. Our largest holding in
the Fund remains Coca- Cola, whose stock price has nearly doubled in the last
year and a half, fueled by strong growth in overseas sales. Tommy Hilfiger, a
retailer of men's clothing, has profited lately from casual Fridays and other
expressions of the trend toward more informal corporate attire. Adaptec and
Cisco Systems, both computer networking stocks that we've owned for some time,
helped give the Fund exposure to the bull market in technology stocks. U.S.
stocks totaled about 29% of the Fund's net assets at the end of October.
JAPAN: WAITING FOR RECOVERY
Japanese stocks totaled about 12% of the Fund at the end of the period. Everyone
is still waiting for the recovery in Japan, but so far progress has been slow.
The yen rallied early in the year but any currency gains for U.S. investors were
more than offset by the yen's 25% plunge since last March. Year-to-date through
the end of October, the Nikkei Index was down 12% in U.S. dollar terms.
[Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investments"; the header for the right column is "Recent
performance ... and what's behind the numbers. The first listing is America
Online followed by an up arrow and the phrase "Growing subscriber base." The
second listing is Orkla followed by an up arrow and the phrase "Solid earnings
growth." The third listing is Fujisawa Pharmaceutical followed by a flat arrow
and the phrase "Pulled down by soft market." Footnote below reads: "See
"Schedule of Investments." Investment holdings are subject to change."]
[CAPTION]
"...THERE WERE POCKETS OF STRONG PERFORMANCE IN EUROPE..."
4
<PAGE> 5
John Hancock Funds - Global Fund
[Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the year ended October 31, 1995." The chart is
scaled in increments of 6% from bottom to top, with 6% at the top and -6% at the
bottom. Within the chart there are three solid bars. The first represents the
- -0.37% total return for the John Hancock Global Fund, Class A. The second
represents the -1.01% total return for John Hancock Global Fund, Class B. The
third represents the 5.18% total return for the average global fund. A 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."]
One recent purchase that's done reasonably well, however, is Oki Electric, which
makes telecommunications equipment. We'll be paying close attention to Japanese
technology stocks in the wake of the U.S. rally. Many seem cheap now compared to
their U.S. counterparts and could profit from the huge untapped market for
personal computers in Japan.
EMERGING MARKETS: HONG KONG A BRIGHT SPOT
The Fund made money selectively in Latin America with two Chilean stocks. One
stock, Madeco, has interests in copper mining and telecommunications. We sold it
during the period. The other is Santa Isabel, a supermarket chain with
operations in Chile and Argentina. For the most part, however, Asian stocks
dominated the Fund's 25% stake in emerging markets, led by Hong Kong, with 6% of
the Fund's net assets. Hong Kong was also one of the few emerging markets to
finish solidly ahead during the period. One of our largest holdings was Cheung
Kong, a developer that has begun to profit from a turnaround in the local real
estate market.
AUSTRALIA AND NEW ZEALAND: LUMBER AND MINING
With the exception of News Corp., the Australian media giant led by Rupert
Murdoch, and Telecom Corporation of New Zealand, lumber and mining stocks
dominated the Fund's nearly 10% stake in Australia and New Zealand. Prominent
names include New Zealand's Carter Holt Harvey, a forest products company, and
Australia's Western Mining, a metals producer, which is among the largest
investments in the Fund.
OUTLOOK
After a year like the one we've had, it's important to maintain a long-term
perspective. The good news about foreign markets is that the investment climate
remains strong. Earnings in most cases have come through as expected and most of
the foreign countries where the Fund has investments are still growing at a
faster rate than the United States, especially the emerging markets. Once
investor sentiment catches up with the market fundamentals, we could see foreign
stocks convincingly outperform domestic stocks.
- --------------------------------------------------------------------------------
(1) Figures from Lipper Analytical Services include reinvested dividends and do
not take into account sales charges. Actual load-adjusted performance is lower.
[CAPTION]
"...IT'S IMPORTANT TO MAINTAIN A LONG-TERM PERSPECTIVE."
5
<PAGE> 6
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 dividends and capital gains, assuming
reinvestment of these distributions and the change in the price of the Fund's
shares, expressed as a percentage of the Fund's average net assets. 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.
Note: Participant-directed defined-contribution plans with at least 100 eligible
employees at inception of the Fund account may purchase Class A shares without
an initial sales charge as of March 15, 1995. If those shares are redeemed,
however, during the year following the calendar year end during which they were
purchased, a contingent deferred sales charge will be assessed.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
LIFE
ONE FIVE OF
YEAR YEARS FUND
---- ----- ------
<S> <C> <C> <C>
John Hancock Global Fund: Class A (1.19%) 31.80%(1) N/A
John Hancock Global Fund: Class B (1.67%) 73.79% 125.45%(2)
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
LIFE
ONE FIVE OF
YEAR YEARS FUND
---- ----- ------
<S> <C> <C> <C>
John Hancock Global Fund: Class A (1.19%) 7.66%(1) N/A
John Hancock Global Fund: Class B (1.67%) 11.69% 9.37%(2)
</TABLE>
NOTES TO PERFORMANCE
(1) Class A shares started on January 3, 1992.
(2) Class B shares started on September 2, 1986.
6
<PAGE> 7
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 October 31, 1995, 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 $14,114 as of October 31, 1995. 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 $13,685 as of October 31, 1995. The third
line represents the Global Fund after sales charge and is equal to $12,996 as of
October 31, 1995.
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 $23,878 as of October 31, 1995. 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 $22,204 as of
October 31, 1995.
*No contingent deferred sales charge applicable.]
7
<PAGE> 8
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 OCTOBER 31, 1995. YOU'LL
ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF
THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $94,227,986)............................ $114,555,783
Bonds (cost - $450,000)....................................... 387,000
Joint repurchase agreement (cost - $1,243,000)................ 1,243,000
------------
116,185,783
Cash........................................................... 28,955
Foreign currency, at value (cost - $17,415).................... 17,436
Receivable for shares sold..................................... 29,674
Receivable for investments sold................................ 1,967,069
Interest receivable............................................ 2,275
Dividends receivable........................................... 109,329
Foreign tax receivable......................................... 127,128
Prepaid expenses............................................... 4,884
------------
Total Assets................................. 118,472,533
------------------------------------------------------------
LIABILITIES:
Payable for shares repurchased................................. 41,678
Foreign tax payable............................................ 44,074
Payable to John Hancock Advisers, Inc. and
affiliates - Note B........................................... 140,923
Accounts payable and accrued expenses.......................... 78,536
------------
Total Liabilities............................ 305,211
------------------------------------------------------------
NET ASSETS:
Capital paid-in................................................ 89,749,452
Accumulated net realized gain on investments and
foreign currency transactions................................. 8,178,513
Net unrealized appreciation of investments and
foreign currency transactions................................. 20,239,357
------------
Net Assets................................... $118,167,322
============================================================
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 - $93,597,600/7,386,947................................ $ 12.67
==============================================================================
Class B - $24,569,722/1,987,986................................ $ 12.36
==============================================================================
MAXIMUM OFFERING PRICE PER SHARE *
Class A - ($12.67 x 105.26%)................................... $ 13.34
==============================================================================
<FN>
* On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
** All Class C shares were redeemed on March 31, 1995.
</TABLE>
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.
<TABLE>
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $238,137)............................................ $ 1,857,264
Interest....................................................... 144,294
-----------
2,001,558
-----------
Expenses:
Investment management fee - Note B............................ 1,169,884
Distribution/service fee - Note B
Class A..................................................... 280,610
Class B..................................................... 270,868
Transfer agent fee - Note B................................... 429,087
Custodian fee................................................. 177,008
Auditing fee.................................................. 35,000
Registration and filing fees.................................. 32,872
Printing...................................................... 30,301
Trustees' fees................................................ 23,924
Miscellaneous................................................. 5,322
Legal fees.................................................... 1,997
-----------
Total Expenses............................... 2,456,873
------------------------------------------------------------
Net Investment Loss.......................... (455,315)
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments sold.......................... 8,116,459
Net realized loss on foreign currency transactions............. (408,732)
Change in net unrealized appreciation/depreciation
of investments................................................ (8,546,361)
Change in net unrealized appreciation/depreciation of
foreign currency transactions................................. 104,979
-----------
Net Realized and Unrealized
Loss on Investments and
Foreign Currency Transactions................ (733,655)
------------------------------------------------------------
Net Decrease in Net Assets
Resulting from Operations.................... $(1,188,970)
============================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------
INCREASE (DECREASE) IN NET ASSETS: 1995 1994
------------ ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss.................................................................. $ (455,315) $ (804,218)
Net realized gain on investments sold and foreign currency transactions.............. 7,707,727 13,362,429
Change in net unrealized appreciation/depreciation of investments and foreign
currency transactions.............................................................. (8,441,382) (2,685,194)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations..................... (1,188,970) 9,873,017
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain on investments sold and foreign
currency transactions
Class A - ($1.3307 and $1.3069 per share, respectively)............................. (9,441,512) (8,324,136)
Class B - ($1.3307 and $1.3069 per share, respectively)............................. (3,043,184) (1,992,338)
Class C** - ($1.3307 and $1.3069 per share, respectively)........................... (73,482) (39,722)
------------ ------------
Total Distributions to Shareholders............................................... (12,558,178) (10,356,196)
------------ ------------
FROM FUND SHARE TRANSACTIONS-- NET*.................................................... (1,632,583) 23,496,918
------------ ------------
NET ASSETS:
Beginning of period.................................................................. 133,547,053 110,533,314
------------ ------------
End of period ....................................................................... $118,167,322 $133,547,053
============ ============
<FN>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------
1995 1994
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold...................................................... 881,102 $ 10,949,764 1,101,077 $ 15,133,189
Shares issued to shareholders in reinvestment of distributions... 781,667 9,168,928 600,746 8,080,042
---------- ------------ ---------- ------------
1,662,769 20,118,692 1,701,823 23,213,231
Less shares repurchased.......................................... (1,407,258) (17,445,162) (917,934) (12,478,014)
---------- ------------ ---------- ------------
Net increase..................................................... 255,511 $ 2,673,530 783,889 $ 10,735,217
========== ============ ========== ============
CLASS B
Shares sold...................................................... 546,939 $ 6,634,570 1,382,515 $ 18,646,101
Shares issued to shareholders in reinvestment of distributions... 239,739 2,759,391 126,915 1,687,968
---------- ------------ ---------- ------------
786,678 9,393,961 1,509,430 20,334,069
Less shares repurchased.......................................... (1,082,302) (13,070,250) (590,659) (7,901,948)
---------- ------------ ---------- ------------
Net increase (decrease).......................................... (295,624) $ (3,676,289) 918,771 $ 12,432,121
========== ============ ========== ============
CLASS C**
Shares sold...................................................... 10,813 $ 130,313 21,769 $ 293,927
Shares issued to shareholders in reinvestment of distributions... 6,201 73,482 2,938 39,640
---------- ------------ ---------- ------------
17,014 203,795 24,707 333,567
Less shares repurchased.......................................... (69,733) (833,619) (303) (3,987)
---------- ------------ ---------- ------------
Net increase (decrease).......................................... (52,719) $ (629,824) 24,404 $ 329,580
========== ============ ========== ============
<FN>
** All Class C shares were redeemed on March 31, 1995.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
<TABLE>
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:
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
1995 1994 1993 1992 1991
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CLASS A (a)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period........................ $ 14.16 $ 14.30 $ 10.55 $ 11.31
------- -------- ------- -------
Net Investment Loss......................................... (0.03)(b) (0.07)(b) (0.10)(b) (0.04)(b)
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions......................... (0.13) 1.24 3.85 (0.72)
------- -------- ------- -------
Total from Investment Operations.......................... (0.16) 1.17 3.75 (0.76)
------- -------- ------- -------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold
and Foreign Currency Transactions......................... (1.33) (1.31) -- --
------- -------- ------- -------
Net Asset Value, End of Period.............................. $ 12.67 $ 14.16 $ 14.30 $ 10.55
======= ======== ======= =======
Total Investment Return at Net Asset Value (d).............. (0.37%) 8.64% 35.55% (6.72%)
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................... $93,597 $100,973 $90,787 $76,980
Ratio of Expenses to Average Net Assets..................... 1.87% 1.98% 2.12% 2.47%*
Ratio of Net Investment Loss to Average Net Assets.......... (0.23%) (0.54%) (0.86%) (0.60%)*
Portfolio Turnover Rate..................................... 60% 61% 108% .69%
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period........................ $ 13.93 $ 14.17 $ 10.50 $ 10.92 $ 9.94
------- -------- ------- ------- -------
Net Investment Loss......................................... (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......................... (0.13) 1.22 3.82 (0.30) 1.35
------- -------- ------- ------- -------
Total from Investment Operations.......................... (0.24) 1.07 3.67 (0.42) 1.34
------- -------- ------- ------- -------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold
and Foreign Currency Transactions......................... (1.33) (1.31) -- -- (0.36)
------- -------- ------- ------- -------
Net Asset Value, End of Period.............................. $ 12.36 $ 13.93 $ 14.17 $ 10.50 $ 10.92
======= ======== ======= ======= =======
Total Investment Return at Net Asset Value (d).............. (1.01%) 7.97% 34.95% (3.85%) 14.04%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................... $24,570 $ 31,822 $19,340 $11,475 $28,686
Ratio of Expenses to Average Net Assets..................... 2.57% 2.59% 2.49% 2.68% 2.60%
Ratio of Net Investment Loss to Average Net Assets.......... (0.89%) (1.12%) (1.25%) (1.03%) (0.12%)
Portfolio Turnover Rate..................................... 60% 61% 108% 69% 106%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------------------------------------------------------
<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%) 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%
<FN>
* 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.
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: THE 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.
11
<PAGE> 12
FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
GLOBAL FUND ON OCTOBER 31, 1995. IT'S DIVIDED INTO THREE MAIN CATEGORIES: COMMON
STOCKS, BONDS AND SHORT-TERM INVESTMENTS. COMMON STOCKS AND BONDS ARE FURTHER
BROKEN DOWN BY COUNTRY. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S
"CASH" POSITION, ARE LISTED LAST.
<TABLE>
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
<S> <C> <C>
COMMON STOCKS
AUSTRALIA (7.08%)
Broken Hill Proprietary Co., Ltd.
(Diversified Operations)..................... 131,500 $ 1,780,980
Newcrest Mining Ltd.
(Gold Mining & Products)..................... 250,000* 1,028,336
News Corp. Ltd. (The) (Publishing)............ 345,000 1,739,717
Renison Goldfields Consolidated Ltd.
(Metal Processing & Products)................ 323,900 1,361,920
Western Mining Corp. Holdings Ltd.
(Metal Processing & Products)................ 383,750 2,461,285
------------
8,372,238
------------
CHILE (1.24%)
Santa Isabel S.A., American Depositary
Receipts (ADR) (Retail)**.................... 64,600* 1,461,575
------------
DENMARK (1.10%)
Tele Danmark AS (Telecommunications).......... 25,000* 1,303,990
------------
FINLAND (2.46%)
Metra Oy (Machinery).......................... 34,000* 1,472,832
Nokia AB (Telecommunications)................. 25,000* 1,430,219
------------
2,903,051
------------
FRANCE (2.71%)
LVMH Moet Henessey Louis Vuitton
(Beverages).................................. 9,250 1,840,504
Societe Nationale Elf Aquitaine
(Oil & Gas).................................. 20,000 1,361,935
------------
3,202,439
------------
GERMANY (3.38%)
Bayer AG (Chemicals).......................... 4,000 1,063,939
Bayerische Motoren Werke AG
(Automobile/Trucks).......................... 2,400* 1,287,298
Mannesmann AG
(Diversified Operations)..................... 5,000* 1,645,709
------------
3,996,946
------------
HONG KONG (6.05%)
Cheung Kong (Holdings) Ltd. (Real Estate)..... 250,000 1,409,780
CITIC Pacific Ltd. (Diversified Operations)... 500,000 1,561,752
HSBC Holdings Ltd. (Banks).................... 100,200 1,457,959
Swire Pacific Ltd. (Diversified Operations)... 200,000 1,500,317
Wharf Holdings Ltd.
(Diversified Operations)..................... 360,000* 1,215,257
------------
7,145,065
------------
INDONESIA (0.71%)
PT Tambang Timah, Global Depositary
Receipts (Metal Process & Products)**........ 70,000* 841,750
------------
ITALY (2.35%)
Banca Commerciale Italiana S.P.A.
(Banks)...................................... 480,000* 935,006
Olivetti & C. S.P.A. (Computers)**............ 1,450,000* 1,082,497
Telecom Italia S.P.A.
(Telecommunications)......................... 500,000* 759,097
------------
2,776,600
------------
JAPAN (11.66%)
Fanuc Ltd. (Machinery)........................ 35,000 1,515,714
Fujisawa Pharmaceutical Co., Ltd. (Drugs)..... 130,000* 1,265,751
Itochu Corp. (Diversified Operations)......... 300,000 1,777,213
Jusco Co., Ltd (Retail)....................... 70,000 1,642,309
Matsushita Electric Industrial Co., Ltd.
(Electronics)................................ 120,000 1,700,963
Nippon Television Network Corp.
(Broadcasting)............................... 3,600* 858,693
Oki Electric Industry Co., Ltd.
(Telecommunications)**....................... 110,000* 1,018,329
Sanwa Bank Ltd. (Banks)....................... 60,000* 1,020,578
Sony Corp. (Electronics)...................... 32,000 1,438,975
TDK Corp. (Electronics)....................... 30,000* 1,545,530
------------
13,784,055
------------
LUXEMBOURG (1.12%)
Scandinavian Broadcasting System (ADR)
(Broadcasting)**............................. 55,000 1,320,000
------------
MALAYSIA (1.24%)
Resorts World Berhad
(Leisure & Recreation)....................... 300,000 1,463,991
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
<TABLE>
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
<S> <C> <C>
MEXICO (0.47%)
Telefonos de Mexico S.A. de C.V. (ADR)
(Telecommunications)......................... 20,000 $ 550,000
------------
NETHERLANDS (2.74%)
Gucci Group N.V. (Shoes & Related
Apparel)**................................... 20,000* 600,000
Koninklijke P.T.T. Nederland
(Telecommunications)......................... 46,800 1,646,216
Polygram N.V. ADR (Audio/Video)............... 16,000 992,000
------------
3,238,216
------------
NEW ZEALAND (2.47%)
Carter Holt Harvey Ltd. (Paper)............... 700,000 1,672,718
Telecom Corporation of New Zealand
(Telecommunications)......................... 300,000 1,245,627
------------
2,918,345
------------
NORWAY (1.97%)
Orkla AS (Diversified Operations)............. 45,000* 2,326,963
------------
PAKISTAN (0.18%)
Crescent Textile Mills (Textile)**............ 283,676 213,488
------------
SINGAPORE (2.95%)
Hongkong Land Holdings Ltd.
(Real Estate)................................ 500,000* 900,000
Jardine Matheson Holdings Ltd.
(Diversified Operations)..................... 130,000* 793,000
Keppel Corp.
(Diversified Operations)..................... 218,000 1,789,667
------------
3,482,667
------------
SPAIN (1.75%)
Fomento de Construcciones y Contratas
SA (Construction)............................ 6,000 423,743
Repsol SA (Oil & Gas)......................... 55,000 1,642,497
------------
2,066,240
------------
SWEDEN (5.22%)
Atlas Copco AB (Machinery).................... 127,500 1,929,607
Hennes & Mauritz AB (Retail).................. 19,500* 1,274,433
Investor AB (Diversified Operations).......... 37,500* 1,335,534
Telefonaktiebolaget (LM) Ericsson
(Telecommunications)......................... 77,000 1,634,943
------------
6,174,517
------------
SWITZERLAND (1.47%)
Ciba-Geigy AG (Drugs)......................... 2,000 1,731,701
------------
THAILAND (1.88%)
Bangkok Bank (Banks).......................... 150,000 1,549,771
Italian-Thai Development Public Co., Ltd.
(Construction)............................... 60,000* 677,131
------------
2,226,902
------------
UNITED KINGDOM (7.33%)
Carlton Communications PLC
(Broadcasting)............................... 110,000 1,675,652
Dixons Group PLC (Retail)..................... 300,000* 1,816,601
Glaxo Wellcome PLC (Drugs).................... 140,000* 1,888,063
Reed International PLC (Publishing)........... 100,000* 1,520,949
Thorn EMI PLC (Leisure & Recreation).......... 75,500 1,758,285
------------
8,659,550
------------
UNITED STATES (27.41%)
Adaptec, Inc. (Computers)**................... 25,000 1,112,500
America Online, Inc. (Computers)**............ 22,000* 1,760,000
Bell Sports Corp. (Leisure & Recreation)**.... 47,000 440,625
BMC Software, Inc. (Computers)**.............. 25,000* 890,625
Capital Cities/ABC, Inc. (Broadcasting)....... 10,000* 1,186,250
cisco Systems, Inc. (Computers)**............. 24,000 1,860,000
Cobra Golf, Inc. (Leisure & Recreation)**..... 15,000 390,000
Coca-Cola Co. (The) (Beverages)............... 40,000 2,875,000
CUC International Inc. (Retail)**............. 50,625 1,752,891
Disney (Walt) Co. (The)
(Leisure & Recreation)....................... 21,600 1,244,700
Home Depot, Inc. (The) (Retail)............... 35,000 1,303,750
Intel Corp. (Electronics)..................... 15,000* 1,048,125
Intuit, Inc. (Computers)**.................... 10,000* 720,000
Johnson & Johnson (Drugs)..................... 30,000 2,445,000
Micron Technology, Inc. (Electronics)......... 12,500* 882,812
Nabisco Holdings Corp. (Class A) (Food)....... 25,000* 671,875
New World Communications Group, Inc.
(Broadcasting)**............................. 12,500* 206,250
Nine West Group, Inc. (Shoes &
Related Apparel)**........................... 30,000* 1,335,000
Softkey International, Inc. (Computers)**..... 20,000* 630,000
Tommy Hilfiger Corp. (Retail)**............... 39,400 1,502,125
Triton Energy Corp. (Oil & Gas)**............. 15,000* 699,375
U.S. Order, Inc. (Telecommunications)**....... 50,000* 750,000
UUNET Technologies, Inc. (Computers)**........ 20,000* 1,215,000
Viacom, Inc. (Class B) (Broadcasting)**....... 30,307 1,515,350
Viking Office Products, Inc. (Office
Equipment & Supplies)**...................... 23,000 1,023,500
Wal-Mart Stores, Inc. (Retail)................ 38,000 821,750
WorldCom, Inc. (Telecommunications)**......... 64,766* 2,112,991
------------
32,395,494
------------
TOTAL COMMON STOCKS
(Cost $94,227,986) (96.94%) 114,555,783
------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
<TABLE>
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------- ---- --------------- -----
<S> <C> <C> <C>
BONDS
PERU (0.33%)
Tele 2000 S.A. (Telecommunications)
Conv. Note 04-14-97................ 9.750% $ 450 $ 387,000
------------
TOTAL BONDS
(Cost $450,000) (0.33%) 387,000
----- ------------
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (1.05%)
Investment in a joint repurchase
agreement transaction with SBC
Capital Markets Inc. -
Dated 10-31-95,
Due 11-01-95 (secured by
U.S. Treasury Bond, 8.75%
Due 05-15-17, and by
U.S. Treasury Note, 5.75%
Due 09-30-97) Note A............... 5.890 1,243 1,243,000
------------
TOTAL SHORT-TERM INVESTMENTS (1.05%) 1,243,000
------ ------------
TOTAL INVESTMENTS (98.32%) $116,185,783
====== ============
<FN>
* Securities, other than short-term investments, newly added to the portfolio
during the year ended October 31, 1995.
** Non-income producing security.
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
INDUSTRY DIVERSIFICATION (UNAUDITED)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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 OCTOBER 31, 1995 ASSIGNED TO THE VARIOUS INVESTMENT CATEGORIES.
<TABLE>
<CAPTION>
MARKET VALUE OF SECURITIES AS A
INVESTMENT CATEGORIES % OF FUNDS NET ASSETS
<S> <C>
Audio/Video ................................................ 0.84%
Automobile/Trucks .......................................... 1.09
Banks ...................................................... 4.20
Beverages .................................................. 3.99
Broadcasting ............................................... 5.72
Chemicals .................................................. 0.90
Computers .................................................. 7.85
Construction ............................................... 0.93
Diversified Operations ..................................... 13.31
Drugs ...................................................... 6.20
Electronics ................................................ 5.60
Food ....................................................... 0.57
Gold Mining & Products ..................................... 0.87
Leisure & Recreation ....................................... 4.48
Machinery .................................................. 4.16
Metal Processing & Products ................................ 3.95
Office Equipment & Supplies ................................ 0.87
Oil & Gas .................................................. 3.13
Paper ...................................................... 1.42
Publishing ................................................. 2.76
Real Estate ................................................ 1.95
Retail ..................................................... 9.80
Shoes & Related Apparel .................................... 1.64
Telecommunications ......................................... 9.81
Textile .................................................... 0.18
Utilities .................................................. 1.05
Short-Term Investments ..................................... 1.05
-----
TOTAL INVESTMENTS 98.32%
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
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. Prior to
January 1, 1995, the Fund was known as John Hancock Freedom Global Fund, John
Hancock Global Income Fund was known as John Hancock Freedom Global Income Fund
and John Hancock International Fund was known as John Hancock Freedom
International Fund.
The Trustees have authorized the issuance of two classes of shares 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. Shareholders of a class which bears
distribution/service expenses under the terms of a distribution plan, have
exclusive voting rights regarding such distribution plan. Class C shares were
outstanding during the period from November 1, 1994 through March 31, 1995. The
Trustees abolished Class C shares as of May 1, 1995. 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 instruments 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.
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.
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
investments, 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.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date or, in the case of some foreign securities,
on the date thereafter when the Fund is made aware of the dividend. Interest
income on investment securities is recorded on the accrual basis. Foreign income
may be subject to foreign withholding taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations, which may differ from
generally accepted accounting principles. Dividends paid by the Fund with
respect to each class of shares will be calculated in the same manner, at the
same time and will be in the same amount, except for the effect of expenses that
may be applied differently to each class as explained previously.
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
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 determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees if any, are calculated daily at the class level based
on the appropriate net assets of each class and the specific expense rate(s)
applicable to each class.
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially expressed in
terms of foreign currencies are translated into U.S. dollars based on London
currency exchange quotations as of 5:00 p.m., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain/(loss) on investments are
translated at the rates prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at fiscal
year end, resulting from changes in the exchange rate.
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 October 31, 1995, there were no open forward foreign currency exchange
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 andadvice 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)
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
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. Prior to January 1, 1995 JH Funds was known as John Hancock
Broker Distribution Services, Inc. For the period ended October 31, 1995, net
sales charges received with regard to sales of Class A shares amounted to
$132,895. Out of this amount, $19,426 was retained and used for printing
prospectuses, advertising, sales literature and other purposes, $31,246 was paid
as sales commissions to unrelated broker-dealers and $82,223 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 October 31,
1995, contingent deferred sales charges paid to JH Funds amounted to $61,845.
In addition, to reimburse 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%
effective August 1, 1995.
The Fund has a transfer agent agreement with John Hancock Investor Services
Corporation ("Investor Services"), a wholly-owned subsidiary of The Berkeley
Financial Group. Prior to January 1, 1995, Investor Services was known as John
Hancock Fund Services, Inc.
Prior to January 1, 1995, the Fund paid Investor Services a monthly
transfer agent fee equivalent, on an annual basis, to 0.36% and 0.30% of the
average daily net asset value of Class A and Class B shares of the Fund,
respectively, plus out-of-pocket expenses incurred by Fund Services on behalf of
the Fund. For the period November 1, 1994 and through March 31, 1995, Class C
shares paid a monthly transfer agent fee equivalent, on an annual basis, to
0.10% of the average daily net asset value of Class C shares plus out-of-pocket
expenses incurred by Fund Services. All Class C shares were redeemed on March
31, 1995. For the period January 1, 1995 and through September 30, 1995 Class A
and Class B shares paid transfer agent fees based on the number of shareholder
accounts and certain out-of-pocket
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Fund
expenses. For the eleven months ended September 30, 1995 the transfer agent
expense, calculated as a class specific expense was $315,372 for Class A and
$90,903 for Class B, respectively. Effective October 1, 1995 transfer agent
expense is being treated as a fund expense based on the number of shareholder
accounts in the Fund and certain out-of-pocket expenses.
Edward J. Boudreau, Jr. is a director and officer of the Adviser and 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 will make investments into other John Hancock Funds, as applicable, to
cover its liability for the deferred compensation. Investments to cover the
Fund's deferred compensation liability will be recorded on the Fund's books as
an other asset. The deferred compensation liability and the investment to cover
the liability will be marked to market on a periodic basis to reflect income
earned by the investment.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended October 31, 1995 aggregated $72,187,511 and
$85,985,846, respectively. There were no purchases or sales of obligations of
the U.S. government and its agencies during the period ended October 31, 1995.
The cost of investments owned at October 31, 1995 (including the joint
repurchase agreement) for Federal income tax purposes was $95,920,986. Gross
unrealized appreciation and depreciation of investments aggregated $25,830,467
and $5,565,670, respectively, resulting in net unrealized appreciation of
$20,264,797.
NOTE D --
RECLASSIFICATION OF ACCOUNTS
During the year ended October 31, 1995, the Fund reclassified amounts to reflect
a decrease in accumulated net investment loss of $455,315, an increase in
accumulated net realized gain on investments of $470,656 and a decrease in
capital paid-in of $925,971. This represents the amount necessary to report
these balances on a tax basis, excluding certain temporary differences, as of
October 31, 1995. Additional adjustments may be needed in subsequent reporting
periods. These reclassifications, which have no impact on the net asset value of
the Fund, are primarily attributable to the treatment of net operating losses in
the computation of distributable income and capital gains under federal tax
rules versus generally accepted accounting principle.
19
<PAGE> 20
John Hancock Funds - Global Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock Global Fund and the Trustees of Freedom
Investment Trust II
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of John Hancock Global Fund (the
"Fund") (formerly known as John Hancock Freedom Global Fund) (a portfolio of
Freedom Investment Trust II) at October 31, 1995, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1995 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
December 18, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund during the fiscal year ended October
31, 1995.
The Fund designated distributions to shareholders of $9,813,715 as a
long-term capital gain dividend. These amounts were reported 1994 U.S. Treasury
Department Form 1099-DIV in January 1995 representing their proportionate share.
It is anticipated that there will be a distribution from net realized gains from
sales of securities to shareholders of record on December 22, 1995, and payable
on December 29, 1995. Shareholders will receive a 1995 U.S. Treasury Department
Form 1099-DIV in January 1996 representing their proportionate share.
None of the distributions qualify for the dividends received deduction
available to corporations.
20
<PAGE> 21
NOTES
John Hancock Funds - Global Fund
21
<PAGE> 22
NOTES
John Hancock Funds - Global Fund
22
<PAGE> 23
NOTES
John Hancock Funds - Global Fund
23
<PAGE> 24
Bulk Rate
[LOGO] JOHN HANCOCK FUNDS U.S. Postage
A GLOBAL INVESTMENT MANAGEMENT FIRM PAID
101 Huntington Avenue Boston, MA 02199-7603 Brockton, MA
Permit No. 582
[A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."]
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Global 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 caption "Printed on Recycled
Paper."]
JHD 0300A 10/95
12/95
