SEMIANNUAL REPORT
The latest report from your
Fund's management team
Global Fund
APRIL 30, 1999
TRUSTEES
Edward J. Boudreau, Jr.
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.*
William J. Cosgrove
Douglas M. Costle
Leland O. Erdahl
Richard A. Farrell
Gail D. Fosler
William F. Glavin
Anne C. Hodsdon
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02199-7603
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
CHAIRMAN'S MESSAGE
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief
Executive Officer, flush right next to third paragraph.]
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting
ready to celebrate this historic transition to a new millennium. At John
Hancock Funds, we share the excitement, but we aren't popping the
champagne corks just yet. Rather, we are staying on the course that we set
more than two years ago to ensure that the transition to a new millennium
is a smooth one for our shareholders.
As many already know, the Year 2000 has created more than the prospect of
New Year's festivities of epic proportions. It has also presented the
world with a challenge: making sure that older computers, and any
equipment powered by computer chips, can properly read and process the
date "00" as 2000, not 1900. Much has been written about how the world
will weather the change. Some view it as a non-event, while others see the
potential for disruptions. How much disruption, and for how long, depends
on whom you talk to.
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an
important issue to be dealt with and we have made it a top priority. Two
years ago, John Hancock Funds put a full-time team of experts on the case
and established a company-wide program to evaluate all computer
applications and to modify or replace those that needed changing.
These modifications and replacements are nearly done, and the tests of all
our systems are on schedule for completion by the end of July. The rest of
1999 will be spent testing with our business partners and continuing to
participate in industry testing. We have also established additional
contingency plans beyond our regular ones to prepare for any challenges
that the Year 2000 might present. In the end, John Hancock will spend
approximately $90-$95 million to ensure we make a successful transition to
the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is
featuring articles with more detailed information on Y2K matters of
importance to our shareholders. I encourage you to read them, or contact
one of our Customer Service Representatives at 1-800-225-5291 for another
copy. For your own peace of mind, we also recommend that you save your
1999 statements, especially those you receive between October and
December, so that you are able to check them against the first one you
receive in 2000. It's a measure of prudence, not panic. Good record
keeping is part of good planning.
No one knows how the dawning of the new millennium will unfold. Although
we cannot make any ironclad assurances, we are confident that the steps we
have taken will provide shareholders with as smooth a transition as
possible. Once that occurs, we will happily raise our glasses to toast the
New Year, future prosperity and our hopes to serve you well into the
2000's.
Sincerely,
/S/ EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BY MIREN ETCHEVERRY, JOHN L.F. WILLS AND GERARDO J. ESPINOZA, PORTFOLIO
MANAGERS
[A 3 1/2" x 2 1/2" photo at bottom right side of page of John Hancock Global
Fund. Caption below reads "Global Fund portfolio management team (l-r):
"John Willis, Gerardo Espinoza, Jean-Marc Berteaux and Miren Etcheverry."]
John Hancock Global Fund
Japan and emerging markets rebound in recent period
World markets gained ground over the last six months, as last summer's
global economic turmoil began to subside. The move up was volatile,
however, while investors sorted through the economic developments and
market leadership changed hands. Perhaps the biggest stories during the
period were the resurgence of Japan and the recession-ravaged emerging
Asian and Latin American markets. In Japan, foreign investors long
underweighted in the second largest market began pouring money back in
after a bank rescue program was implemented and several large corporate
restructurings were announced in March.
Brazil's ability to control the effects of its currency's devaluation in
January was the spark for renewed investor confidence that emerging
markets worldwide were coming out of last summer's woods. A strong U.S.
economy and stock market and rising commodity prices also helped the
commodity-dependent emerging markets of Latin America stage their dramatic
rebound. The rally was still not enough, however, to bring them back to
their earlier levels. European markets, which had dominated foreign
markets last year, took a breather in the last several months because of a
slowdown in growth and the unexpected decline of the new euro common
currency since its January 1 debut.
"...last
summer's
global
economic
turmoil
began to
subside."
Stability: a mixed blessing
For the six months ended April 30, 1999, John Hancock Global Fund's Class
A and Class B shares posted total returns of 14.00% and 13.65%,
respectively, at net asset value. By comparison, the Morgan Stanley
Capital International (MSCI) All Country World Free Index returned 20.37%
and the average global fund returned 19.65%, according to Lipper, Inc.1
Class C shares, which were introduced on March 1, 1999, returned 5.05%
from inception through April 30, 1999. Keep in mind that your net asset
value return will be different from the Fund's stated performance if you
were not invested in the Fund for the entire period and did not reinvest
all distributions. Historical performance information can be found on
pages six and seven.
[Pie chart with heading "Portfolio Diversification." The chart is divided
into six sections (from top to left): Latin America 1%, Canada 2%, United
Kingdom & Ireland 15%, Pacific Rim 16%, Continental Europe 29%. and United
States 37%. A note below the chart reads "As a percentage of net assets
on April 30, 1999."]
"...we sought
to maintain a
portfolio that
represented
stability in
a volatile
world."
Given the fluctuating world markets over the last year, we sought to
maintain a portfolio that represented stability in a volatile world. As a
result, we kept an overweighting in Europe and in the blue-chip names.
While this helped the Fund in the first half of the period, it detracted
from our performance in 1999, when Europe's economic growth slowed and the
value of the euro fell by 12% versus the dollar. At the sector level, our
overweighting in European utility, food and household product companies
such as Danone and Nestle held us back. Food companies were hurt by their
exposure to emerging markets, and utility companies lagged when good
economic news sent investors into less defensive sectors.
[Table at bottom of left hand column entitled "Scorecard". The header for
the left column is "Investment" and the header for the right column is
"Recent Performance...and What's Behind the Numbers". The first listing is
Nokia followed by an up arrow with the phrase "Growing demand for cellular
phones." The second listing is Microsoft followed by an up arrow with the
phrase "Continued leadership in technology software." The third listing is
Nestle followed by a down arrow with the phrase "Hurt by slowing emerging-
market economies." A note below the table reads "See 'Schedule of
Investments.' Investment holdings are subject to change."]
Europe stays overweighted
Despite this, we are maintaining an overweighting in Europe, because we
still believe in the long-term opportunities stemming from corporate
restructuring. Indeed our European companies involved in restructurings or
mergers continued to be our top performers. These included Royal Philips
Electronics, Mannesmann and Vodafone. However, we pared our European
holdings slightly to take advantage of opportunities in Japan and to move
out of weaker markets. While we still like France, we slightly reduced our
overweighting there, and moved out of Belgium's more defensive utility
companies. We also cut our stake in Germany, given its heavy emphasis on
manufacturing and exports, which could be stung by the Continent's
slowdown. That said, we continued to increase our stake in the U.K. since
evidence suggests that its economy is picking up steam.
Make room for Japan, Hong Kong
Following our cautious approach, we increased our stake in Japan gradually
over the period, yet we still moved from a 6% position last November to
12% at the end of April through a combination of additional purchases and
good performance. Announcements of several important corporate
restructurings, including Fund holdings Sony and NTT Data Corp., suggest
that Japan is finally moving in the right direction, placing more emphasis
on shareholder value. We increased our stake in these and other companies
proactively pursuing restructurings. We also upped our holdings in
financial stocks, given the positive implications of the bank
recapitalization program.
[Bar chart at top of left hand column with heading "Fund Performance". Under
the heading is a note that reads "For the six months ended April 30, 1999."
The chart is scaled in increments of 5% with 0% at the bottom and 20% at the
top. The first bar represents the 14.00% total return for John Hancock
Global Fund Class A. The second bar represents the 13.65% total return for
John Hancock Global Fund Class B. The third bar represents the 5.05%* total
return for John Hancock Global Fund Class C. The fourth bar represents the
19.65% total return for Average global fund. A note below the chart 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, Inc.1
See the following two pages for historical performance information. *From
inception March 1, 1999 through April 30, 1999."]
During the period, we also re-established a small stake in Hong Kong. As
for emerging markets, we are returning slowly, only after careful analysis
and deliberation. In this period, for example, we re-entered Brazil with
our purchase of its high-quality Telecomunicacoes Brasileiras
communications company.
U.S. shift from technology to cyclicals
For much of the period, a handful of U.S. large-company growth stocks
dominated the market's performance, including Microsoft, the Fund's top
holding and a key contributor to our performance. In April, however,
investors turned away from the pricey technology and Internet stocks in
favor of cyclical stocks like paper and steel, whose fortunes are more
tied to the strength of the economy. Our stake in the U.S. grew from 35%
to 37% of the Fund's net assets during the period, but that was still less
than the weighting of our peers and the MSCI. We also missed out on much
of the market's move in April to cyclical stocks, given our light
weighting there.
"...we
increased
our stake
in Japan
gradually
over the
period..."
Positive outlook
Our optimism is growing about the prospects for global equities.
Better-than-expected world economic growth and the re-emergence of Asia
and the emerging markets are bolstering our enthusiasm. We will keep an
important position in the U.S., given the strong fundamentals supporting
the market, and we'll maintain a strong presence in Europe, where we see
the recent pullback as a normal market correction after a period of
sustained strength. Our belief in this region has been reinforced by the
European Central Bank's recent interest rate cuts and by current economic
forecasts of stronger growth later this year. Now that we have risen to a
more average weighting in Japan, we will keep our position fairly steady,
focusing on companies that are restructuring and will benefit from any
domestic economic recovery. In Latin America, it appears the economic
slowdown will be less pronounced than expected. This, plus the speed of
reforms taking place there and in Asia, leaves us more favorably inclined
toward these markets.
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 political, economic
and currency risks and differences in accounting standards and financial
reporting.
1 Figures from Lipper, Inc. 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
measures the change in value of an investment from the beginning to the
end of a period, assuming all distributions were reinvested.
For Class A shares, total return figures include a maximum applicable
sales charge of 5%. Prior to August 1992, different sales charges were in
effect for Class A shares and are not reflected in the performance data.
Class B performance reflects a maximum contingent deferred sales charge
(maximum 5% and declining to 0% over six years). Class C performance
includes a contingent deferred sales charge (1% declining to 0% after one
year).
All figures represent past performance and are no guarantee of future
results. 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 read 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, before you
invest or send money.
CLASS A
For the period ended March 31, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/92)
------- ------- -------
Cumulative Total Returns 1.98% 57.05% 97.34%
Average Annual Total Returns 1.98% 9.45% 9.84%
CLASS B
For the period ended March 31, 1999
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Cumulative Total Returns 1.73% 57.91% 143.87%
Average Annual Total Returns 1.73% 9.57% 9.32%
CLASS C
For the period ended March 31, 1999
SINCE
INCEPTION
(3/1/99)
-------
Cumulative Total Return 3.11%
Average Annual Total Return 3.11%(1)
Notes to Performance
(1) Not annualized.
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, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the same
$10,000 investment in the Morgan Stanley Capital International (MSCI) All
Country World Free Index -- an unmanaged index used to measure the
performance of both developed and emerging stock markets. The index
represents stocks that are freely traded on equity exchanges around the
world. Past performance is not indicative of future results.
Line chart with the heading John Hancock 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 MSCI All
Country World Free Index and is equal to $25,835. The second line represents
the value of the hypothetical $10,000 investment made in the John Hancock
Global Fund on January 3, 1992, before sales charge, and is equal to $20,971
as of April 30, 1999. The third line represents the value of the same
hypothetical investment made in the John Hancock Global Fund, after sales
charge, and is equal to $19,915 as of April 30, 1999.
Line chart with the heading John Hancock 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 MSCI All
Country World Free Index and is equal to $31,757. The second line represents
the value of the hypothetical $10,000 investment made in the John Hancock
Global Fund on October 31, 1988, before sales charge, and is equal to $27,628
as of April 30, 1999.
Line chart with the heading John Hancock Global Fund Class C, 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 MSCI All
Country World Free Index and is equal to $10,902. The second line represents
the value of the hypothetical $10,000 investment made in the John Hancock
Global Fund on March 1, 1999, before sales charge, and is equal to $10,505 as
of April 30, 1999. The third line represents the value of the same
hypothetical investment made in the John Hancock Global Fund, after sales
charge, and is equal to $10,405 as of April 30, 1999.
*No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
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, 1999.
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, 1999 (Unaudited)
- -----------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks, rights and warrants
(cost - $148,078,884) $175,937,378
Short-term investments (cost - $14,326,853) - Note A 14,326,853
--------------
190,264,231
Foreign currency, at value (cost - $6,908) 6,889
Receivable for investments sold 3,090,761
Receivable for forward foreign currency exchange
contracts sold - Note A 12
Receivable for shares sold 10,282
Dividends receivable 286,591
Foreign tax receivable 102,286
Other assets 12,253
--------------
Total Assets 193,773,305
- -----------------------------------------------------------------------
Liabilities:
Due to custodian 155,250
Payable for investments purchased 2,688,214
Payable for shares repurchased 6,742
Payable upon return of securities on loan
- - Note A 14,326,853
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 200,781
Accounts payable and accrued expenses 93,556
--------------
Total Liabilities 17,471,396
- -----------------------------------------------------------------------
Net Assets:
Capital paid-in 140,608,115
Accumulated net realized gain on investments and
foreign currency transactions 8,867,058
Net unrealized appreciation of investments and
foreign currency transactions 27,852,703
Accumulated net investment loss (1,025,967)
--------------
Net Assets $176,301,909
=======================================================================
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)
Class A - $119,954,673/8,347,967 $14.37
=======================================================================
Class B - $56,268,645/4,159,439 $13.53
=======================================================================
Class C * - $78,591/5,810 $13.53
=======================================================================
Maximum Offering Price Per Share**
Class A - ($14.37 x 105.26%) $15.13
=======================================================================
* Class C shares commenced operations on March 1, 1999.
** 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.
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, 1999 (Unaudited)
- -----------------------------------------------------------------------
Investment Income:
Dividends (net of foreign withholding
taxes of $58,700) $1,070,846
Interest (including income on securities loaned
of $22,519) 125,403
--------------
1,196,249
--------------
Expenses:
Investment management fee - Note B 770,674
Distribution and service fee - Note B
Class A 186,432
Class B 233,156
Class C 51
Transfer agent fee - Note B 324,453
Custodian fee 119,086
Registration and filing fees 20,292
Auditing fee 17,771
Interest expense - Note A 13,726
Financial services fee - Note B 12,989
Trustees' fees 4,365
Printing 4,071
Legal fees 962
--------------
Total Expenses 1,708,028
- -----------------------------------------------------------------------
Net Investment Loss (511,779)
- -----------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 9,084,817
Net realized gain on foreign currency
transactions 307,497
Change in net unrealized appreciation/depreciation
of investments 15,490,219
Change in net unrealized appreciation/depreciation
of foreign currency transactions (19,104)
--------------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions 24,863,429
- -----------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $24,351,650
=======================================================================
See notes to financial statements.
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
---------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($924,241) ($511,779)
Net realized gain on investments sold and
foreign currency transactions 35,860,865 9,392,314
Change in net unrealized
appreciation/depreciation of investments
and foreign currency transactions (17,528,493) 15,471,115
-------------- --------------
Net Increase in Net Assets Resulting from
Operations 17,408,131 24,351,650
-------------- --------------
Distributions to Shareholders:
Distributions from net realized gain on
investments sold and foreign currency transactions
Class A - ($0.9595 and $0.8634 per share,
respectively) (7,059,333) (7,257,489)
Class B - ($0.9595 and $0.8634 per share,
respectively) (2,130,122) (3,737,875)
-------------- --------------
Total Distributions to Shareholders (9,189,455) (10,995,364)
-------------- --------------
From Fund Share Transactions - Net:* 47,651,566 (13,058,874)
-------------- --------------
Net Assets:
Beginning of period 120,134,255 176,004,497
-------------- --------------
End of period (including accumulated net
investment loss of $514,188 and
$1,025,967, respectively) $176,004,497 $176,301,909
============== ==============
* Analysis of Fund Share Transactions:
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 15,576,589 $209,111,733 21,183,349 $297,404,016
Shares issued in reorganization -- Note D 1,689,451 21,549,797 -- --
Shares issued to shareholders in
reinvestment of distributions 513,910 6,526,969 537,465 6,883,011
-------------- -------------- -------------- --------------
17,779,950 237,188,499 21,720,814 304,287,027
Less shares repurchased (15,925,820) (215,196,184) (22,344,548) (315,077,174)
-------------- -------------- -------------- --------------
Net increase (decrease) 1,854,130 $21,992,315 (623,734) ($10,790,147)
============== ============== ============== ==============
CLASS B
Shares sold 2,030,542 $27,203,915 625,696 $8,265,396
Shares issued in reorganization -- Note D 2,505,358 30,457,141 -- --
Shares issued to shareholders in
reinvestment of distributions 163,729 1,981,290 261,756 3,164,961
-------------- -------------- -------------- --------------
4,699,629 59,642,346 887,452 11,430,357
Less shares repurchased (2,630,797) (33,983,095) (1,057,764) (13,778,621)
-------------- -------------- -------------- --------------
Net increase (decrease) 2,068,832 $25,659,251 (170,312) ($2,348,264)
============== ============== ============== ==============
CLASS C **
Shares sold -- -- 5,810 $79,537
-------------- -------------- -------------- --------------
Net increase -- -- 5,810 $79,537
============== ============== ============== ==============
** Class C shares commenced operations on March 1, 1999.
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 and foreign
currency gains and losses, distributions paid to shareholders, if any, and
any increase or decrease in money shareholders invested in the Fund. The
footnote illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding
dollar value.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns,
key ratios and supplemental data are listed as follows:
- ---------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
---------------------------------------------------------------- APRIL 30, 1999
1994 1995 1996 1997 1998 (UNAUDITED)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of
Period $14.30 $14.16 $12.67 $12.97 $12.94 $13.46
-------- -------- -------- -------- -------- --------
Net Investment Loss(1) (0.07) (0.03) (0.02) (0.05) (0.05) (0.03)
Net Realized and Unrealized
Gain (Loss) on Investments and
Foreign Currency Transactions 1.24 (0.13) 1.20 1.21 1.53 1.80
-------- -------- -------- -------- -------- --------
Total from Investment
Operations 1.17 (0.16) 1.18 1.16 1.48 1.77
-------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized
Gain on Investments Sold and
Foreign Currency Transactions (1.31) (1.33) (0.88) (1.19) (0.96) (0.86)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $14.16 $12.67 $12.97 $12.94 $13.46 $14.37
======== ======== ======== ======== ======== ========
Total Investment Return at Net
Asset Value(2) 8.64% (0.37%) 9.87% 9.36% 11.88% 14.00%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s
omitted) $100,973 $93,597 $94,746 $92,127 $120,775 $119,955
Ratio of Expenses to Average
Net Assets 1.98% 1.87% 1.88% 1.81%(3) 1.82%(3) 1.72%(3,5)
Ratio of Net Investment Loss to
Average Net Assets (0.54%) (0.23%) (0.19%) (0.36%) (0.33%) (0.40%)(5)
Portfolio Turnover Rate 61% 60% 98% 81% 160% 56%
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of
Period $14.17 $13.93 $12.36 $12.54 $12.39 $12.76
-------- -------- -------- -------- -------- --------
Net Investment Loss(1) (0.15) (0.11) (0.10) (0.14) (0.13) (0.06)
Net Realized and Unrealized
Gain (Loss) on Investments and
Foreign Currency Transactions 1.22 (0.13) 1.16 1.18 1.46 1.69
-------- -------- -------- -------- -------- --------
Total from Investment
Operations 1.07 (0.24) 1.06 1.04 1.33 1.63
-------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized
Gain on Investments Sold and
Foreign Currency Transactions (1.31) (1.33) (0.88) (1.19) (0.96) (0.86)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $13.93 $12.36 $12.54 $12.39 $12.76 $13.53
======== ======== ======== ======== ======== ========
Total Investment Return at Net
Asset Value(2) 7.97% (1.01%) 9.10% 8.67% 11.15% 13.65%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s
omitted) $31,822 $24,570 $27,599 $28,007 $55,229 $56,269
Ratio of Expenses to Average
Net Assets 2.59% 2.57% 2.54% 2.49%(3) 2.46%(3) 2.25%(3,5)
Ratio of Net Investment Loss to
Average Net Assets (1.12%) (0.89%) (0.83%) (1.04%) (0.97%) (0.94%)(5)
Portfolio Turnover Rate 61% 60% 98% 81% 160% 56%
<CAPTION>
Financial Highlights (continued)
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
MARCH 1, 1999
(COMMENCEMENT OF
OPERATIONS)
TO APRIL 30, 1999
(UNAUDITED)
----------
<S> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of
Period $12.88
--------
Net Investment Loss(1) (0.01)
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions 0.66
--------
Total from Investment
Operations 0.65
--------
Net Asset Value, End of Period $13.53
========
Total Investment Return at Net
Asset Value(2) 5.05%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s
omitted) $79
Ratio of Expenses to Average
Net Assets 2.42%(3,5)
Ratio of Net Investment Loss to
Average Net Assets (0.78%)(5)
Portfolio Turnover Rate 56%
(1) Based on the average of the shares outstanding at the end of each month.
(2) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(3) Expense ratios do not include interest expense due to bank loans, which amounted to less than $0.01 per share.
(4) Not annualized.
(5) Annualized.
The Financial Highlights summarizes the impact of the following factors on a single share for each period indicated:
net investment loss, 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>
Schedule of Investments
April 30, 1999 (Unaudited)
- -------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Global Fund on April 30, 1999. It's divided into four main categories: common
stocks, rights, warrants and short-term investments. Common stocks, rights
and warrants are further broken down by country. Short-term investments,
which represent the Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
- ------------------- --------- ------
COMMON STOCKS
Australia (1.77%)
Australia & New Zealand Banking Group
Ltd., American Depositary Receipts
(ADR) (Banks - Foreign) 19 $748
National Australia Bank Ltd.
(Banks - Foreign) 22,352 435,164
News Corp. Ltd. (The) (Media) 44,054 369,190
News Corp. Ltd. (The) (ADR) (Media) 10,622 346,543
Normandy Mining Ltd. (Metal) 407,998 353,690
Telstra Corp., Ltd.
(Telecommunications) 238,417 1,293,734
Westpac Banking Corp., Ltd.
(Banks - Foreign) 43,000 328,260
-------------
3,127,329
-------------
Belgium (0.68%)
Fortis (B) (Insurance) 27,234 913,448
Fortis (B) (Strip) (Insurance)* 8,190 87
Fortis (B) (Certificate De Valeur Garantie)
(Insurance)* 910 4,672
Tractebel SA (Utilities) 2,094 287,794
-------------
1,206,001
-------------
Brazil (0.64%)
Telecomunicacoes Brasileiras S.A.
(Telecommunications) 12,308 1,122,336
Telecomunicacoes Brasileiras S.A. (ADR)
(Telecommunications) 12,308 962
-------------
1,123,298
-------------
Canada (1.84%)
Bombardier, Inc. (Diversified
Operations) 118,004 1,829,017
Northern Telecom Ltd.
(Telecommunications) 8,055 546,907
Royal Bank of Canada
(Banks - Foreign) 1 49
Toronto-Dominion Bank
(Banks - Foreign) 16,369 874,718
-------------
3,250,691
-------------
Denmark (0.43%)
Novo Nordisk A/S (Medical) 4,108 402,905
Tele Danmark A/S
(Telecommunications) 3,400 350,381
-------------
753,286
-------------
Finland (1.46%)
Nokia (AB) OY
(Telecommunications) 33,316 2,567,477
-------------
France (8.82%)
Accor SA (Leisure) 1,359 358,194
Axa SA (Insurance) 8,463 1,092,506
Banque Nationale de Paris
(Banks - Foreign) 13,663 1,132,316
Cap Gemini SA (Computers) 6,056 925,727
Carrefour SA (Retail) 427 338,312
Castorama Dubois Investissements SA
(Retail) 2,995 716,628
Danone SA (Food) 7,267 1,942,246
Elf Aquitaine SA (Oil & Gas) 3,106 482,333
Etablissements Economiques du Casino
Guichard-Perrachon SA (Retail) 6,267 617,027
France Telecom SA
(Telecommunications) 9,777 789,608
Legrand SA (Electronics) 1,404 335,200
L'Oreal SA (Cosmetics & Personal
Care) 2,556 1,636,296
Pinault-Printemps-Redoute SA
(Retail) 5,888 976,553
Promodes SA (Retail) 446 282,693
Schneider SA (Machinery) 3,500 228,314
Suez Lyonnaise des Eaux SA
(Diversified Operations) 7,735 1,315,572
Synthelabo SA (Medical) 1,381 282,295
Total SA (Oil & Gas) 5,839 799,414
Vivendi SA (Diversified Operations) 5,569 1,300,752
-------------
15,551,986
-------------
Germany (2.76%)
Allianz AG (Insurance) 1,339 426,478
Bayerische Hypo- und Vereinsbank AG
(Banks - Foreign) 10,741 700,097
DaimlerChrysler AG
(Automobile/Trucks)* 5,933 585,709
Deutsche Telekom AG
(Telecommunications) 11,520 453,931
Fresenius AG (Medical) 784 119,263
Mannesmann AG (Machinery) 10,577 1,392,224
Metro AG (Retail) 2,447 176,815
VEBA AG (Diversified Operations) 7,617 417,619
Viag AG (Diversified Operations) 1,168 593,494
-------------
4,865,630
-------------
Hong Kong (0.79%)
Cheung Kong Holdings Ltd.
(Real Estate Operations) 30,000 272,868
HSBC Holdings Ltd. (Banks -
Foreign) 8,958 332,848
Hutchison Whampoa Ltd.
(Diversified Operations) 31,000 277,964
New World Development Co., Ltd.
(Real Estate Operations) 95,627 236,878
Swire Pacific Ltd.
(Diversified Operations) 50,000 280,609
-------------
1,401,167
-------------
Ireland (2.19%)
Allied Irish Banks Plc (ADR)
(Banks - Foreign) 23,715 2,276,640
Anglo Irish Bank Corp. Plc
(Banks - Foreign) 221,077 654,390
CRH Plc (Building) 31,852 625,132
Irish Life Plc (Insurance) 34,002 311,784
-------------
3,867,946
-------------
Italy (2.30%)
Alleanza Assicurazioni SpA
(Insurance) 24,692 296,061
Assicurazioni Generali SpA
(Insurance) 9,000 350,355
Banca Popolare di Brescia SpA
(Banks - Foreign) 28,000 962,803
Istituto Nazionale delle Assicurazioni
SpA (Insurance) 99,105 261,736
Telecom Italia Mobile SpA
(Telecommunications) 137,015 816,349
Telecom Italia SpA
(Telecommunications) 83,058 883,567
UniCredito Italiano SpA
(Banks - Foreign) 65,881 334,064
Unione Immobiliare SpA
(Real Estate Operations) 270,459 154,856
-------------
4,059,791
-------------
Japan (12.19%)
Bank of Tokyo-Mitsubishi, Ltd.
(Banks - Foreign) 79,000 1,165,617
Credit Saison Co., Ltd. (Finance) 10,200 208,407
Daiwa House Industry Co., Ltd.
(Building) 45,000 536,970
Denso Corp. (Automobile/Trucks) 43,000 873,179
Fuji Photo Film Co., Ltd. (Leisure) 26,000 981,913
Fujitsu Ltd. (Computers) 55,000 941,844
Honda Motor Co., Ltd.
(Automobile/Trucks) 32,000 1,409,479
Ito-Yokado Co., Ltd. (Retail) 9,000 552,420
Kansai Electric Power Co., Inc.
(Utilities) 38,000 749,372
Marui Co., Ltd. (Retail) 52,000 862,603
Matsushita Electric Industrial Co., Ltd.
(Electronics) 81,000 1,539,692
NIDEC Corp. (Machinery) 2,900 376,403
Nippon Telegraph & Telephone Corp.
(Telecommunications) 179 1,948,585
Nomura Securities Co., Ltd.
(Broker Services) 105,000 1,132,474
NTT Data Corp. (Telecommunications) 230 1,820,047
NTT Mobile Communication Network, Inc.
(Telecommunications) 17 996,483
Orix Corp. (Leasing Companies) 8,000 643,778
Sakura Bank, Ltd. (The)
(Banks - Foreign) 88,000 339,709
Sankyo Co., Ltd. (Medical) 18,000 377,575
Secom Co., Ltd.
(Protection - Safety Equip. & Svc.) 9,000 878,747
Sekisui House, Ltd. (Building) 22,000 246,307
Sony Corp. (Electronics) 15,500 1,447,203
Sumitomo Trust & Banking Co., Ltd.
(Banks - Foreign) 156,000 765,500
Takeda Chemical Industries, Ltd.
(Medical) 16,000 695,361
-------------
21,489,668
-------------
Netherlands (2.05%)
ABN AMRO Holding NV (ADR)
(Banks - Foreign) 999 23,414
AEGON NV (Insurance) 14,855 1,424,124
Royal KPN NV (Telecommunications) 11,000 459,006
Royal Philips Electronics NV
(Electronics) 16,474 1,418,356
TNT Post Group NV (Transport) 11,000 296,320
-------------
3,621,220
-------------
Norway (0.51%)
Orkla ASA (Diversified Operations) 53,376 895,238
-------------
Portugal (1.08%)
Electricidade de Portugal SA
(Utilities) 42,317 795,726
Portugal Telecom SA
(Telecommunications) 26,389 1,099,761
-------------
1,895,487
-------------
Singapore (0.58%)
Overseas-Chinese Banking Corp., Ltd.
(Banks - Foreign) 85,455 800,999
Singapore Telecommunications, Ltd.
(Telecommunications) 119,000 220,279
-------------
1,021,278
-------------
Spain (3.28%)
Argentaria SA (Banks - Foreign) 61,736 1,451,751
Banco Bilbao Vizcaya SA
(Banks - Foreign) 29,204 436,852
Banco Santander SA (Banks -
Foreign) 766 16,637
Endesa SA (Utilities) 50,595 1,124,558
Iberdrola SA (Utilities) 17,776 248,816
Repsol SA (Oil & Gas) 37,452 609,290
Telefonica SA (Telecommunications) 26,364 1,235,189
TelePizza SA (Retail)* 103,981 659,073
-------------
5,782,166
-------------
Sweden (1.29%)
Ericsson (LM) Telefonaktiebolaget
(Telecommunications) 15,180 398,527
Investor AB (Diversified
Operations) 19,318 876,946
Nordbanken Holding AB
(Banks - Foreign) 148,353 931,932
Saab AB (Aerospace) 7,162 58,148
-------------
2,265,553
-------------
Switzerland (5.23%)
Adecco SA (Business Services -
Misc.) 2,332 1,175,400
Barry Callebaut AG (Food) 1,547 250,448
Credit Suisse Group (Banks -
Foreign) 1,809 358,670
Nestle SA (Food) 1,054 1,950,214
Novartis AG (Medical) 588 860,591
Roche Holding AG (Medical) 110 1,293,439
UBS AG (Banks - Foreign) 2,952 1,002,252
Zurich Allied AG (Insurance) 3,605 2,322,681
-------------
9,213,695
-------------
United Kingdom (12.66%)
Allied Zurich Plc (Insurance)* 21,640 286,853
Anglian Water Plc (B shares)
(Utilities) 30,000 22,200
BP Amoco Plc (Oil & Gas) 60,048 1,139,871
British Aerospace Plc (Aerospace) 157,498 1,178,157
British American Tobacco Plc
(Tobacco) 21,640 182,416
British Telecommunications Plc
(Telecommunications) 56,981 951,486
Diageo Plc (Beverages) 65,544 754,955
Glaxo Wellcome Plc (Medical) 63,000 1,866,832
Hanson Plc (Building) 58,394 580,539
Kingfisher Plc (Retail) 68,000 1,015,154
Lloyds TSB Group Plc
(Banks - Foreign) 156,582 2,523,972
Misys Plc (Computers) 30,708 285,532
Pearson Plc (Media) 27,242 578,479
Pennon Group Plc (Utilities) 26,000 394,839
Prudential Corp. Plc (Insurance) 22,135 314,780
Royal & Sun Alliance Insurance Group,
Plc (Insurance) 133,132 1,151,161
Royal Bank of Scotland Group, Plc
(Banks - Foreign) 16,351 386,141
Scottish & Southern Energy Plc
(Utilities) 56,000 526,109
SEMA Group Plc (Computers) 81,223 785,287
SmithKline Beecham Plc (Medical) 123,523 1,633,408
Tesco Plc (Retail) 206,098 612,538
Thames Water Plc (Utilities) 17,333 239,381
Unilever Plc (Consumer Products
Misc.) 154,260 1,371,073
Vodafone Group Plc
(Telecommunications) 149,901 2,761,118
WPP Group Plc (Advertising) 87,927 779,379
-------------
22,321,660
-------------
United States (37.23%)
Abbott Laboratories (Medical) 10,974 531,553
Albertson's, Inc. (Retail) 15,900 818,850
Allied Signal, Inc. (Diversified
Operations) 7,900 464,125
American Express Co. (Finance) 3,750 490,078
American International Group, Inc.
(Insurance) 7,730 907,792
AT&T Corp. (Telecommunications) 16,600 838,300
Bank of America Corp.
(Banks - United States) 21,700 1,562,400
Baxter International, Inc.
(Medical) 32,120 2,023,560
Becton, Dickinson & Co. (Medical) 33,119 1,231,613
Chase Manhattan Corp.
(Banks - United States) 7,550 624,763
Chevron Corp. (Oil & Gas) 16,200 1,615,950
Cisco Systems, Inc. (Computers)* 20,300 2,315,469
Citigroup, Inc. (Banks - United
States) 28,550 2,148,387
Clorox Co. (Soap & Cleaning
Preparations) 17,300 1,995,987
Dayton Hudson Corp. (Retail) 47,370 3,188,593
Diebold, Inc. (Business Services -
Misc.) 1 24
EMC Corp. (Computers)* 8,350 909,628
Exxon Corp. (Oil & Gas) 14,125 1,173,258
Fannie Mae (Mortgage Banking) 14,200 1,007,312
First Union Corp. (Banks - United
States) 14,440 799,615
Fleet Financial Group, Inc.
(Banks - United States) 11,050 475,841
General Electric Co. (Electronics) 26,066 2,749,963
Hasbro, Inc. (Leisure) 23,650 807,056
Home Depot, Inc. (The) (Retail) 22,102 1,324,739
Intel Corp. (Electronics) 36,450 2,230,284
International Business Machines Corp.
(Computers) 7,900 1,652,581
Johnson & Johnson (Medical) 29,615 2,887,462
Lilly (Eli) & Co. (Medical) 15,550 1,144,869
Lowe's Cos., Inc. (Retail) 28,278 1,491,664
Lucent Technologies, Inc.
(Telecommunications) 9,000 541,125
McDonald's Corp. (Retail) 28,300 1,199,212
MCI WorldCom, Inc.
(Telecommunications)* 17,675 1,452,664
Merck & Co., Inc. (Medical) 11,450 804,363
Microsoft Corp. (Computers)* 51,050 4,151,003
Morgan Stanley Dean Witter & Co.
(Broker Services) 16,778 1,664,168
PepsiCo, Inc. (Beverages) 23,950 884,653
Pfizer, Inc. (Medical) 7,656 880,919
Philip Morris Cos., Inc. (Tobacco) 13,530 474,396
Schering-Plough Corp. (Medical) 54,461 2,631,147
Sun Microsystems, Inc. (Computers)* 21,300 1,274,006
SunTrust Banks, Inc.
(Banks - United States) 13,900 993,850
SYSCO Corp. (Retail) 16,450 488,359
Tyco International Ltd.
(Diversified Operations) 39,200 3,185,000
United Technologies Corp.
(Aerospace) 12,650 1,832,669
Walgreen Co. (Retail) 30,500 819,688
Wal-Mart Stores, Inc. (Retail) 18,942 871,332
Wells Fargo Co. (Banks - United
States) 47,900 2,068,681
-------------
65,628,951
-------------
TOTAL COMMON STOCKS
(Cost $148,071,805) (99.78%) 175,909,518
------------- -------------
RIGHTS
Spain (0.01%)
Telefonica SA (Telecommunications)* 26,364 24,509
-------------
TOTAL RIGHTS
(Cost $0) (0.01%) 24,509
------------- -------------
WARRANTS
Germany (0.00%)
Muenchener Rueckversicherungs-
Gesellschaft AG (Insurance)* 38 1,305
-------------
Hong Kong (0.00%)
Moulin International Holding Ltd.
(Diversified Operations)* 293,629 2,046
-------------
TOTAL WARRANTS
(Cost $7,079) (0.00%) 3,351
------------- -------------
TOTAL COMMON STOCKS,
RIGHTS AND WARRANTS
(Cost $148,078,884) (99.79%) 175,937,378
------------- -------------
PAR VALUE
(000s OMITTED)
-------------
SHORT-TERM INVESTMENTS
Non-Cash Security Lending Collateral (0.42%)
U.S. Treasury Bill 4.49% due
06-24-99, U.S. Treasury Bonds
7.125% thru 9.875%, due
11-15-15 thru 02-15-23,
U.S. Treasury Note 3.375%
due 01-15-07 and U.S. Treasury
Note (Strip Principal) 7.50%
due 05-15-02** $732 $731,659
-------------
Cash Equivalents (7.71%)
Navigator Securities Lending
Prime Portfolio** 13,595 13,595,194
-------------
TOTAL SHORT-TERM INVESTMENTS (8.13%) 14,326,853
------------- -------------
TOTAL INVESTMENTS (107.92%) 190,264,231
------------- -------------
OTHER ASSETS AND LIABILITIES, NET (7.92%) (13,962,322)
------------- -------------
TOTAL NET ASSETS (100.00%) $176,301,909
============= =============
* Non-income producing security.
** Represents investment of security lending collateral - Note A.
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.
Portfolio Concentration (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 in which 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, 1999 assigned
to the various investment categories.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
- --------------------- ---------------
Advertising 0.44%
Aerospace 1.74
Automobile/Trucks 1.63
Banks - Foreign 10.34
Banks - United States 4.92
Beverages 0.93
Broker Services 1.59
Building 1.13
Business Services - Misc. 0.67
Computers 7.51
Consumer Products Misc. 0.78
Cosmetics & Personal Care 0.93
Diversified Operations 6.49
Electronics 5.51
Finance 0.40
Food 2.35
Insurance 5.71
Leasing Companies 0.36
Leisure 1.22
Machinery 1.13
Media 0.73
Medical 11.15
Metal 0.20
Mortgage Banking 0.57
Oil & Gas 3.30
Protection - Safety Equip. & Svc. 0.50
Real Estate Operations 0.38
Retail 9.65
Soap & Cleaning Preparations 1.13
Telecommunications 13.37
Tobacco 0.37
Transport 0.17
Utilities 2.49
Short-Term Investments 8.13
---------------
TOTAL INVESTMENTS 107.92%
===============
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Investment Trust III (the "Trust") is an open-end management
investment company, registered under the Investment Company Act of 1940.
The Trust consists of five series: John Hancock Global Fund (the "Fund"),
John Hancock Mid Cap Growth Fund, John Hancock Short-Term Strategic
Income Fund, John Hancock Large Cap Growth Fund and John Hancock
International Fund. Prior to June 1, 1999, John Hancock Mid Cap Growth
Fund was known as John Hancock Special Opportunities Fund and John Hancock
Large Cap Growth Fund was known as John Hancock Growth Fund. The other
four series of the Trust are reported in separate financial statements.
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 shares of
the Fund, designated as Class A, Class B and Class C shares. The Trustees
authorized the issuance of Class C shares effective March 1, 1999. The
shares of each class represent an interest in the same portfolio of
investments of the Fund and have equal rights to voting, redemptions,
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 and service expenses under terms of a
distribution plan have exclusive voting rights to that 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 Inc., 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 qualifies as a "regulated investment
company" by complying with the applicable provisions of the Internal
Revenue Code and will not be subject to federal income tax on taxable
income which is distributed to shareholders. Therefore, no federal income
tax provision is required.
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 identifies 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.
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 relative net assets of the respective
classes. Distribution and 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.
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.
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. Actual results
could differ from these estimates.
BANK BORROWINGS The Fund is permitted to have bank borrowings for
temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of
securities. Effective March 12, 1999, the Fund entered into a syndicated
line of credit agreement with various banks, and the agreements
previously in effect were terminated. This agreement enables the Fund to
participate with other funds managed by the Adviser in unsecured lines of
credit with banks which permit borrowings up to $500 million,
collectively. Interest is charged to each fund, based on its borrowings.
In addition, a commitment fee is charged based on the average daily unused
portion of the line of credit and is allocated among the participating
funds. The maximum loan balance during the period amounted to $9,596,049.
The annualized interest rate charged during the period ranged from 5.195%
thru 5.640%. At April 30, 1999, there were no outstanding loan balances.
SECURITIES LENDING The Fund may lend its securities to certain qualified
brokers who pay the Fund negotiated lender fees. These fees are included
in interest income. The loans are collateralized at all times with cash or
securities with a market value at least equal to the market value of the
securities on loan. As with other extensions of credit, the Fund may bear
the risk of delay of the loaned securities in recovery or even loss of
rights in the collateral should the borrower of the securities fail
financially. At April 30, 1999, the Fund loaned securities having a market
value of $13,670,874 collateralized by cash and securities in the amount
of $14,326,853. The cash portion of the collateral was invested in a
short-term instrument.
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 if they are offset by the currency amount
of the underlying transaction.
At April 30, 1999, open forward foreign currency exchange contracts were
as follows:
PRINCIPAL AMOUNT EXPIRATION UNREALIZED
CURRENCY COVERED BY CONTRACT DATE APPRECIATION
- ------------ ------------------- ---------- ------------
SELLS
Danish Krone 48,450 MAY 99 $12
===
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. Buying futures tends to increase the Fund's exposure to the
underlying instrument. Selling futures tends to decrease the Fund's
exposure to the underlying instrument or hedge other Fund instruments. 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 on which it trades.
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, 1999, 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) 0.90% 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.
John Hancock Funds, Inc. ("JH Funds"), a wholly owned subsidiary of the
Adviser, acted as distributors for shares of the Fund. For the period
ended April 30, 1999, net sales charges received with regard to sales of
Class A shares amounted to $71,597. Of this amount, $12,101 was retained
and used for printing prospectuses, advertising, sales literature and
other purposes, $25,044 was paid as sales commissions to unrelated
broker-dealers and $34,452 was paid as sales commissions to sales
personnel of Signator Investors, Inc. ("Signator Investors"), a related
broker-dealer, formerly known as John Hancock Distributors, Inc. The
Adviser's indirect parent, John Hancock Mutual Life Insurance Company
("JHMLICo"), is the indirect sole shareholder of Signator Investors.
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 5.00% of the lesser of the current market value at the time
of redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds and are used in whole or in
part to defray its expenses for providing distribution related services to
the Fund in connection with the sale of Class B shares. For the period
ended April 30, 1999, contingent deferred sales charges paid to JH Funds
amounted to $115,235.
Class C shares which are redeemed within one year of purchase will be
subject to a CDSC at a rate of 1.00% of the lesser of the current market
value at the time of redemption or the original purchase cost of the
shares being redeemed. Proceeds from the CDSC are paid to JH Funds and are
used in whole or in part to defray its expenses for providing
distribution related services to the Fund in connection with the sale of
Class C shares. For the period ended April 30, 1999, there were no
contingent deferred sales charges paid to JH Funds.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution
Plan with respect to Class A, Class B and Class C pursuant to Rule 12b-1
under the Investment Company Act of 1940. Accordingly, the Fund will make
payments to JH Funds for distribution and service expenses, at an annual
rate not to exceed 0.30% of Class A average daily net assets and 1.00% of
Class B and Class C average daily net assets, to reimburse JH Funds for
its distribution and 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.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHMLICo.
The Fund pays transfer agent fees based on the number of shareholder
accounts and certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax and
financial management services for the Fund. The compensation for the
period was at an annual rate of less than 0.02% of the average net assets
of the Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Anne C. Hodsdon and
Mr. Richard S. Scipione are directors and/or officers of the Adviser
and/or its affiliates, as well as Trustees of the Fund. The compensation
of unaffiliated Trustees is borne by the Fund. 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, 1999, the Fund's investments
to cover the deferred compensation liability had unrealized appreciation
of $668.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during
the period ended April 30, 1999, aggregated $99,217,814 and $113,778,239,
respectively. There were no purchases or sales of obligations of the U.S.
government and its agencies during the period ended April 30, 1999.
The cost of investments owned at April 30, 1999 (including short-term
investments) for federal income tax purposes was $162,914,107. Gross
unrealized appreciation and depreciation of investments aggregated
$32,546,387 and $5,196,263, respectively, resulting in net unrealized
appreciation of $27,350,124.
NOTE D -
REORGANIZATION
On November 12, 1997, the shareholders of John Hancock Global Marketplace
Fund ("Global Marketplace Fund") approved a plan of reorganization
between Global Marketplace Fund and the Fund providing for the transfer of
substantially all of the assets and liabilities of Global Marketplace Fund
to the Fund in exchange solely for Class A and Class B shares of the Fund.
The acquisition was accounted for as a tax free exchange of 1,689,451
Class A shares and 2,505,358 Class B shares of John Hancock Global Fund
for the net assets of Global Marketplace Fund, which amounted to
$21,549,797 and $30,457,141 for Class A and Class B shares, respectively,
including $12,299,215 of unrealized appreciation, after the close of
business on December 5, 1997.
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030SA 4/99
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