<PAGE> 1
JOHN HANCOCK FUNDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
GLOBAL RX
FUND
ANNUAL REPORT
August 31, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
Dennis S. Aronowitz*
Richard P. Chapman, Jr.*
William J. Cosgrove*
Gail D. Fosler*
Bayard Henry*
Richard S. Scipione
Edward J. Spellman*
*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
Michael P. DiCarlo
Senior Vice President
James K. Ho
Senior Vice President
John A. Morin
Vice President
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
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
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" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
Investors around the world have been watching Wall Street in awe for the better
part of 1995. Through August, the Dow Jones Industrial Average has reached
record highs and has grown, along with the Standard & Poor's 500-Stock Index, by
more than 20%. 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 the Congressional rhetoric is just
beginning to heat up, 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
MICHAEL P. DICARLO, CHIEF EQUITY OFFICER AND
INTERIM PORTFOLIO MANAGER
JOHN HANCOCK
GLOBAL RX FUND
HEALTH-CARE STOCKS ON TRACK AS INVESTORS
EMPHASIZE FUNDAMENTALS
On July 1, 1995 Michael P. DiCarlo took over as interim portfolio manager of
John Hancock Global Rx Fund. Mr. DiCarlo also manages John Hancock Special
Equities Fund, John Hancock Special Opportunities Fund and John Hancock
Multi-Sector Growth Fund.
As fears of government-imposed health-care reform continued to fade, health-care
stocks returned to favor as investors emphasized industry and company
fundamentals. Since these fundamentals, primarily earnings, improved during the
period, the health-care sector as a whole performed admirably amid the stellar
stock market environment that dominated the better part of the Fund's fiscal
year.
A few factors drove the health-care sector's gains. The Food and Drug
Administration has made a noticeable shift toward faster approval of new
products, like drugs and medical devices. What's more, physicians who had
retrenched in response to managed care have adjusted and become more aggressive
in prescribing treatments. That boosted spending in the sector. As company
earnings rose, investor sentiment improved and analysts began to anticipate
further profit increases.
During the last quarter of 1994 and into early 1995, health-care service
companies such as HMOs and health-care providers that operate hospital
management firms, nursing homes and sub-acute care facilities were strong
performers. However, HMO shares lagged during recent months, as investors began
to anticipate
[A 2" x 3" photo of Michael P. DiCarlo at bottom right.
Caption reads: "Michael P. DiCarlo, Interim Portfolio Manager."]
[CAPTION]
"...THE HEALTH-CARE SECTOR... PERFORMED ADMIRABLY AMID THE STELLAR STOCK MARKET
ENVIRONMENT..."
3
<PAGE> 4
John Hancock Funds - Global Rx Fund
[Chart with heading "Top Five Common Stock Holdings" at top of left hand column.
The chart lists five holdings: 1) Community Health Systems 6.3% 2) HEALTHSOUTH
5.4% 3) Cardinal health 5.2% 4) I Stat 4.7% 5) HPR 4.3%. A footnote below reads
"As a percentage of net assets on August 31, 1995."]
weaker premium pricing and higher medical cost inflation. The health-care
provider group has also not kept pace lately due to fears about government
reimbursements.
Against that backdrop, John Hancock Global Rx Fund had a total return
for Class A and Class B shares of 30.89% and 29.71%, respectively, at net asset
value, for the fiscal year ended August 31, 1995. By comparison, the average
health-care/biotechnology fund gained 24.99%, according to Lipper Analytical
Services.(1)
Most of the gains came during the first six months of the fiscal year,
when the Fund's emphasis on health-care service stocks buoyed performance. As
investors shifted money to other areas of the health-care industry, such as
pharmaceuticals and biotechnology, the Fund's relatively smaller positions in
those segments caused it to miss out on some of their gains. But our comfort
level with the biotech rally is not high. Apart from the largest companies in
the group, shares of these firms trade largely on news and sentiment, rather
than fundamental factors such as earnings or sales -- which for many firms are
still non-existent. We prefer to avoid the risks inherent in these stocks, even
if it means sitting out an occasional rally.
[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 Boston
Scientific followed by an up arrow and the phrase "Dominant player in a
fast-growing field." The second listing is PhyCor followed by an up arrow and
the phrase "Acquisition pace accelerates." The third listing is Humana followed
by a down arrow and the phrase "Disappointing earnings." Footnote below reads:
"See "Schedule of Investments." Investment holdings are subject to change."]
REFOCUSING ON FUNDAMENTALS BROADENS PORTFOLIO
Historically, the Fund has been overweighted in companies such as HMOs that
would benefit from the onset of managed care. As the trend toward managed care
has sorted itself out, and more companies have taken up the reform mantra, those
initial beneficiaries of a managed care environment are no longer as attractive
on a relative basis. So we're continuing to re-balance the Fund's portfolio,
shifting our focus to a more diverse array of health-care stocks chosen with an
eye toward fundamentals.
During the period, we increased our position in medical device companies
such as Boston Scientific, a solid performer for the Fund. Its acquisition of
Sci-Med Life systems made Boston Scientific a major player in interventional
cardiology, a fast-growing field. We've beefed up our stake in companies that
deliver health-care information systems and technology, adding HPR, a provider
of electronic claims processing and other software. And we're focusing more on
companies related to the physician practice management business, such as Phycor
and Physicians' Reliance Network. Two new entries are MedPartners and
OccuSystems, companies that acquire physicians' clinics, increase the
[CAPTION]
...WE'RE CONTINUING TO RE-BALANCE THE FUND'S PORTFOLIO..."
4
<PAGE> 5
John Hancock Funds - Global Rx Fund
[Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the year ended August 31, 1995." The chart is
scaled in increments of 10% from bottom to top, with 40% at the top and 0% at
the bottom. Within the chart there are three solid bars. The first represents
the 30.89% total return for the John Hancock Global Rx Fund: Class A. The second
represents the 29.71% total return for the John Hancock Global Rx Fund: Class B.
The third represents the 24.99% total return for the average
health-care/technology fund. A footnote below reads: "The total returns for John
Hancock Global Rx Fund are at net asset value with all distributions reinvested.
The average health-care/technology fund is tracked by Lipper Analytical
Services. (1) See following page for historical performance information."]
operating efficiencies and boost revenues by adding doctors and acquiring more
clinics.
The Fund would have benefited from moving more quickly to reduce its
commitment to HMOs such as Humana, which lost ground due to disappointing
earnings. But because Humana's and other HMOs' stock prices declined
significantly in the wake of the bad news about immediate earnings prospects, we
chose to hold on. We'd rather postpone reducing our holdings until investors are
willing to pay a fairer price. We anticipate that they will shortly. Besides, we
aren't totally turning our backs on HMOs. The case for HMOs rests on their
ability to manage care. If they can, medical cost inflation shouldn't be an
issue. Furthermore, the companies we choose should see enrollments keep growing,
and revenues keep increasing.
A LOOK AHEAD
A slow-growing economy should continue to benefit health-care companies which
can increase earnings rapidly even in a slow-growth economic environment. As we
approach a presidential election year, however, we will closely monitor the
impact of politics on the sector. In particular, spending on Medicare and
Medicaid programs are under close Congressional scrutiny. But passage of a
Medicare/Medicaid reform bill is by no means certain. It may be that Congress
will work toward a managed care solution which could end up helping HMOs and
other health-care providers experienced in dealing with managed care.
In any case, we'll stick to our plan. HMO stocks are likely to regain
ground during the coming period. When they do, we'll pare back our holdings
some more and use the profits to further balance the portfolio across all
industry sectors. We'll target companies with rapid top- and bottom-line
growth, strong management, leadership positions in their segments and good
balance sheets.
- --------------------------------------------------------------------------------
(1) Figures from Lipper Analytical Services include reinvested dividends and do
not take into account sales charges. Actual load-adjusted performance is lower.
Special risks are associated with international and sector investing. See the
prospectus for details.
[CAPTION]
"...WE WILL CLOSELY MONITOR THE IMPACT OF POLITICS ON THE SECTOR."
5
<PAGE> 6
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the average annual
total returns for John Hancock Global Rx Fund. Total return is a performance
measure that equals the sum of all income and capital gains dividends, assuming
reinvestment of these distributions, and the change in the price of the Fund's
shares, expressed as a percentage of the Fund's shares. Performance figures
include the maximum applicable sales charge of 5% for Class A shares. 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.
Performance is affected by a 12b-1 plan, which commenced on October 1, 1991 and
March 7, 1994 for Class A and Class B shares, respectively. 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.
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.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1995
ONE LIFE OF
YEAR FUND(1)
---- -------
<S> <C> <C>
Global Rx Fund: Class A 22.79% 80.63%
Global Rx Fund: Class B 23.12% 4.85%
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1995
ONE LIFE OF
YEAR FUND(1)
---- -------
Global Rx Fund: Class A 22.79% 17.08%
Global Rx Fund: Class B 23.12% 6.50%
</TABLE>
NOTES TO PERFORMANCE
(1) Class A shares started on October 1, 1991, and Class B shares started on
March 7, 1994.
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 Rx Fund would be worth on August 31, 1995, assuming you had been invested
for the past ten years or since the day each class of shares started and had
reinvested all distributions. For comparison, we've shown the same $10,000
investment in the Standard & Poor's 500 Stock Index -- an unmanaged index that
includes 500 widely traded common stocks and is often used as a measure of stock
market performance.
[JOHN HANCOCK GLOBAL RX FUND: CLASS A SHARES
Line chart with the heading John Hancock Global Rx 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 hypothetical $10,000 investment made
in the John Hancock Global Rx Fund on October 1, 1991, before sales charge, and
is equal to $21,610 as of August 31, 1995. The second line represents the John
Hancock Global Rx Fund after sales charge and is equal to $20,522 as of August
31, 1995. The third line represents the value of the Standard & Poor's 500
Stock Index and is equal to $16,187 as of August 31, 1995.
JOHN HANCOCK GLOBAL RX FUND: CLASS B SHARES
Line chart with the heading John Hancock Global Rx Fund: Class B, 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 Standard & Poor's 500 Stock Index
and is equal to $12,537 as of August 31, 1995. The second line represents the
value of the hypothetical $10,000 investment made in the John Hancock Global Rx
Fund on March 7, 1994 before sales charge, and is equal to $12,348 as of August
31, 1995. The third line represents the John Hancock Global Rx Fund after sales
charge and is equal to $11,948 as of August 31, 1995.]
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Global Rx 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 AUGUST 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
August 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks, warrants and units
(cost - $19,280,894)...................................... $29,754,795
Joint repurchase agreement (cost - $1,065,000).............. 1,065,000
-----------
30,819,795
Receivable for shares sold................................... 86,628
Interest receivable.......................................... 172
Dividends receivable......................................... 12,310
Foreign tax receivable....................................... 1,168
Other assets................................................. 179
Deferred organization expenses - Note A...................... 8,903
-----------
Total Assets................................ 30,929,155
---------------------------------------------------------
LIABILITIES:
Payable for shares repurchased............................... 14,254
Payable to John Hancock Advisers, Inc. and
affiliates - Note B......................................... 83,216
Accounts payable and accrued expenses........................ 104,204
-----------
Total Liabilities........................... 201,674
---------------------------------------------------------
NET ASSETS:
Capital paid-in.............................................. 19,998,374
Accumulated net realized gain on investments and
foreign currency transactions............................... 255,147
Net unrealized appreciation of investments and
foreign currency transactions............................... 10,473,960
-----------
Net Assets.................................. $30,727,481
=========================================================
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 - $24,394,496 / 1,128,895............................ $ 21.61
==========================================================================
Class B - $6,332,985 / 296,602............................... $ 21.35
==========================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($21.61 x 105.26%)................................. $ 22.75
==========================================================================
<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.
</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 August 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest..................................................... $ 77,520
Dividends (net of foreign withholding taxes of $4,239)....... 55,919
-----------
133,439
-----------
Expenses:
Investment management fee - Note B.......................... 190,775
Transfer agent fee - Note B
Class A................................................... 88,290
Class B................................................... 21,798
Distribution/service fee - Note B
Class A................................................... 61,433
Class B................................................... 33,692
Custodian fee............................................... 62,189
Registration and filing fees................................ 54,670
Advisory board fee - Note B................................. 45,000
Printing.................................................... 32,218
Auditing fee................................................ 31,500
Organization expense - Note A............................... 8,196
Legal fees.................................................. 3,520
Trustees' fees.............................................. 3,269
Miscellaneous............................................... 2,896
-----------
Total Expenses.............................. 639,446
---------------------------------------------------------
Net Investment Loss......................... (506,007)
---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments sold........................ 1,231,564
Net realized loss on foreign currency transactions........... (7,031)
Change in net unrealized appreciation/depreciation of
investments................................................. 5,931,181
Change in net unrealized appreciation/depreciation of
foreign currency transactions............................... (27)
-----------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions............... 7,155,687
---------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations................... $ 6,649,680
=========================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss......................................................................... $ (506,007) $ (366,484)
Net realized gain (loss) on investments sold and foreign currency transactions.............. 1,224,533 (278,198)
Change in net unrealized appreciation/depreciation of investments and foreign currency
transactions.............................................................................. 5,931,154 4,253,495
------------ ------------
Net Increase in Net Assets Resulting from Operations...................................... 6,649,680 3,608,813
------------ ------------
FROM FUND SHARE TRANSACTIONS -- NET*.......................................................... 4,364,193 457,678
------------ ------------
NET ASSETS:
Beginning of period......................................................................... 19,713,608 15,647,117
------------ ------------
End of period............................................................................... $30,727,481 $19,713,608
============ ============
<FN>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------------
1995 1994
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold................................................. 517,942 $9,800,086 476,656 $ 7,537,387
Less shares repurchased..................................... (517,990) (9,686,022) (517,274) (8,116,676)
-------- ----------- --------- ------------
Net increase/(decrease)..................................... (48) $ 114,064 (40,618) $ (579,289)
======== =========== ========= ============
CLASS B **
Shares sold................................................. 451,492 $8,376,819 67,168 $ 1,071,145
Less shares repurchased..................................... (219,936) (4,126,690) (2,122) (34,178)
-------- ----------- --------- ------------
Net increase................................................ 231,556 $4,250,129 65,046 $ 1,036,967
======== =========== ========= ============
<FN>
** Class B shares commenced operations on March 7, 1994
</TABLE>
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,
AND ANY INCREASE OR DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE FUND. THE
FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES SOLD AND REDEEMED DURING THE LAST
TWO PERIODS, ALONG WITH THE CORRESPONDING DOLLAR VALUES.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are as
follows:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE PERIOD
OCTOBER 1, 1991
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED AUGUST 31, TO AUGUST 31,
------------------------------ ---------------
1995 1994 1993 1992
------- ------- ------- -------
<S> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period.......................................... $ 16.51 $ 13.38 $ 13.34 $ 10.00
------- ------- ------- -------
Net Investment Loss........................................................... (0.36)(b) (0.32) (0.23) (0.03)
Net Realized and Unrealized Gain on Investments and Foreign Currency
Transactions................................................................ 5.46 3.45 0.27 3.37
------- ------- ------- -------
Total from Investment Operations............................................. 5.10 3.13 0.04 3.34
------- ------- ------- -------
Net Asset Value, End of Year.................................................. $ 21.61 $ 16.51 $ 13.38 $ 13.34
======= ======= ======= =======
Total Investment Return at Net Asset Value.................................... 30.89% 23.39% 0.30% 33.40%(e)
Total Adjusted Investment Return at Net Asset Value (d)(f).................... -- -- 0.04% 32.11%(e)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)..................................... $24,394 $18,643 $15,647 $14,702
Ratio of Expenses to Average Net Assets**..................................... 2.56% 2.55% 2.50% 1.98%*
Ratio of Adjusted Expenses to Average Net Assets (d).......................... -- -- 2.76% 3.39%*
Ratio of Net Investment Loss to Average Net Assets............................ (1.99%) (2.01%) (1.67%) (0.51%)*
Ratio of Adjusted Net Investment Loss to Average Net Assets (d)............... -- -- (1.93%) (1.92%)*
Portfolio Turnover Rate....................................................... 38% 52% 93% 48%
**Expense Reimbursement Per Share............................................. -- -- $ 0.035 $ 0.085
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: NET INVESTMENT LOSS, GAINS (LOSSES),
DIVIDENDS 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.
10
<PAGE> 11
FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PERIOD
YEAR ENDED ENDED
AUGUST 31, AUGUST 31,
1995 1994
---------- ----------
<S> <C> <C>
CLASS B**
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period....................................................... $ 16.46 $ 17.29(a)
-------- -------
Net Investment Loss........................................................................ (0.55)(b) (0.17)(b)
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions... 5.44 (0.66)(c)
-------- -------
Total from Investment Operations.......................................................... 4.89 (0.83)
-------- -------
Net Asset Value, End of Period............................................................. $ 21.35 $ 16.46
======== =======
Total Investment Return at Net Asset Value................................................. 29.71% (4.80%)(e)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).................................................. $ 6,333 $ 1,071
Ratio of Expenses to Average Net Assets.................................................... 3.45% 3.34%*
Ratio of Net Investment Loss to Average Net Assets......................................... (2.91%) (2.65%)*
Portfolio Turnover Rate.................................................................... 38% 52%
<FN>
* On an annualized basis.
** Class B shares commenced operations on March 7, 1994.
(a) Initial price at commencement of operations.
(b) On average month end shares outstanding.
(c) May not accord to amounts shown elsewhere in the financial statements due to the timing of sales and repurchases of
fund shares in relation to fluctuating market values of the investments of the Fund.
(d) On an unreimbursed basis without expense reduction.
(e) Not annualized.
(f) Unaudited.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
GLOBAL RX FUND ON AUGUST 31, 1995. IT'S DIVIDED INTO THREE MAIN CATEGORIES:
COMMON STOCKS, WARRANTS AND UNITS AND SHORT-TERM INVESTMENTS. THE INVESTMENTS
ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS. SHORT-TERM INVESTMENTS, WHICH
REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED LAST.
<TABLE>
SCHEDULE OF INVESTMENTS
August 31, 1995
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
COMMON STOCKS
BIOMEDICS - GENETICS (0.46%)
Phoenix International Life Sciences,
Inc. (Canada)**............................. 20,000* $ 141,474
-----------
DRUGS - BIOTECHNOLOGY (4.54%)
IDEXX Laboratories, Inc.**................... 30,000 1,005,000
Serologicals Corp.**......................... 25,000* 390,625
-----------
1,395,625
-----------
DRUGS - GENERIC (6.37%)
Dura Pharmaceuticals, Inc.**................. 25,000* 612,500
Fujisawa Pharmaceutical Co. (Japan).......... 40,000* 400,941
Schwarz Pharma AG (Germany)**................ 10,000* 414,991
Teva Pharmaceutical Industries Ltd.
American Depository Receipt
(ADR) (Israel).............................. 14,000 530,250
-----------
1,958,682
-----------
DRUGS - MAJOR (10.52%)
AmeriSource Health Corp. (Class A)**......... 20,000* 445,000
Astra AB (Ser B) (Sweden) **................. 20,000 649,618
Johnson & Johnson............................ 4,000 276,000
Pfizer Inc................................... 8,000 395,000
Roche Holding AG (Switzerland)............... 100 669,710
Sandoz AG (ADR) (Switzerland)................ 12,000 432,339
Schering AG (Germany)........................ 5,000 364,566
-----------
3,232,233
-----------
HEALTHCARE - ALTERNATE SITE (9.79%)
Assisted Living Concepts Inc.**.............. 15,000* 189,375
HEALTHSOUTH Corp.**.......................... 70,000 1,653,750
Integrated Health Services, Inc.............. 5,000 149,375
Lincare Holdings, Inc.**..................... 20,000 595,000
Pediatric Services of America, Inc.**........ 20,000* 422,500
-----------
3,010,000
-----------
HEALTHCARE - COST CONTAINMENT (2.13%)
CRA Managed Care, Inc.**..................... 15,000* 307,500
Value Health, Inc.**......................... 10,000 346,250
-----------
653,750
-----------
HEALTHCARE - HMO (9.42%)
Coventry Corp.**............................. 15,000 298,125
Healthsource, Inc.**......................... 25,000 1,000,000
Humana Inc.**................................ 60,000 1,095,000
OccuSystems Inc.**........................... 12,500* 262,500
Physician Corp. of America **................ 15,000 240,000
-----------
2,895,625
-----------
HEALTHCARE - MANAGEMENT (0.73%)
RTW, Inc.**.................................. 10,000* 225,000
-----------
HEALTHCARE - SOFTWARE/SERVICES (13.31%)
Cerner Corp.**............................... 20,000 680,000
HBO & Co..................................... 20,000 1,090,000
HPR Inc.**................................... 54,000* 1,323,000
Health Management Systems, Inc.**............ 15,000 461,250
PHAMIS, Inc.**............................... 20,000* 535,000
-----------
4,089,250
-----------
HOSPITAL MANAGEMENT (15.00%)
Community Health Systems, Inc.**............. 50,000 1,925,000
Health Management Associates, Inc.
(Class A) **................................ 22,500 753,750
MedPartners, Inc.**.......................... 20,000* 555,000
PhyCor, Inc.**............................... 22,500 939,375
Physician Reliance Network, Inc.**........... 15,000* 435,000
-----------
4,608,125
-----------
MEDICAL - DENTAL (7.39%)
Cardinal Health, Inc......................... 30,000* 1,605,000
Omnicare, Inc................................ 20,000 665,000
-----------
2,270,000
-----------
MEDICAL DEVICES AND PRODUCTS (13.95%)
Boston Scientific Corp.**.................... 25,000* 993,750
i-STAT Corp.**............................... 40,000* 1,440,000
Orthofix International N.V. (Netherlands)**.. 20,000 350,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
<TABLE>
SCHEDULE OF INVESTMENTS
August 31, 1995
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
MEDICAL DEVICES AND PRODUCTS (CONTINUED)
Steris Corp.**............................... 20,000 $ 587,500
Stryker Corp.**.............................. 6,000 250,500
Sunrise Medical, Inc.**...................... 10,000 258,750
Ventritex, Inc.**............................ 20,000* 405,000
-----------
4,285,500
-----------
NURSING HOMES (3.12%)
Health Care and Retirement Corp.**........... 15,000 472,500
Manor Care, Inc.............................. 15,000 485,625
-----------
958,125
-----------
TOTAL COMMON STOCKS
(Cost $19,250,643) (96.73%) 29,723,389
------ -----------
<CAPTION>
NUMBER OF
WARRANTS, UNITS
---------------
<S> <C> <C>
WARRANTS AND UNITS
DRUGS - BIOTECHNOLOGY (0.08%)
Oxigene, Inc. (Warrants)**................... 15,000 26,250
-----------
DRUGS - GENERIC (0.02%)
Therapeutic Discovery Corp. (Units)**........ 750 5,156
-----------
TOTAL WARRANTS AND UNITS
(Cost $30,252) (0.10%) 31,406
------ -----------
TOTAL COMMON STOCKS,
WARRANTS AND UNITS
(Cost $19,280,894) (96.83%) 29,754,795
------ -----------
</TABLE>
<TABLE>
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------- ---- --------------- -----
<S> <C> <C> <C>
SHORT-TERM INVESTMENT
JOINT REPURCHASE AGREEMENT (3.47%)
Investment in a joint repurchase
agreement transaction with UBS
Securities, Inc. - Dated 08-31-95,
Due 9-01-95 (Secured by US
Treasury Bill, 5.540% due 05-30-96;
and US Treasury Note 5.625%,
due 01-31-98) - Note A.............. 5.800% $ 1,065 $ 1,065,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Cost $1,065,000) (3.47%) 1,065,000
------- -----------
TOTAL INVESTMENTS (100.30%) $30,819,795
======= ===========
<FN>
* Securities, other than short-term investments, newly added to the portfolio
during the year ended August 31, 1995.
** Non-income producing security.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
THE GLOBAL RX FUND INVESTS PRIMARILY IN EQUITY SECURITIES OF ISSUERS IN THE
HEALTH CARE INDUSTRY IN THE UNITED STATES AND ABROAD. THE CONCENTRATION OF
INVESTMENTS BY INDUSTRY CATEGORY FOR INDIVIDUAL SECURITIES HELD BY THE FUND IS
SHOWN IN THE SCHEDULE OF INVESTMENTS. IN ADDITION, CONCENTRATION OF INVESTMENTS
CAN BE AGGREGATED BY VARIOUS COUNTRIES. THE TABLE BELOW SHOWS THE PERCENTAGE OF
THE FUND'S INVESTMENTS AT AUGUST 31, 1995 ASSIGNED TO THE VARIOUS COUNTRY
CATEGORIES.
<TABLE>
PORTFOLIO CONCENTRATION (Unaudited)
- --------------------------------------------------------------------------------
<CAPTION>
MARKET VALUE AS A
PORTFOLIO CONCENTRATION % OF NET ASSETS
- ----------------------- -----------------
<S> <C>
Canada..................................................... 0.46%
Germany.................................................... 2.54
Israel..................................................... 1.73
Japan...................................................... 1.30
Netherlands................................................ 1.14
Sweden..................................................... 2.11
Switzerland................................................ 3.59
United States.............................................. 87.43
------
TOTAL INVESTMENTS 100.30%
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock World Fund (the "Trust") is an open-end management investment
company, registered under the Investment Company Act of 1940. The Trust consists
of three series portfolios: John Hancock Global Rx Fund (the "Fund"), John
Hancock Pacific Basin Fund and John Hancock Global Retail Fund.
The Trustees have authorized the issuance of multiple 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, 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. Shareholders of a class which bears
distribution/service expenses under terms of a distribution plan, have exclusive
voting rights to such distribution plan. Significant accounting policies of the
Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value. All portfolio
transactions initially expressed in terms of foreign currencies have been
translated into U.S. dollars as described in "Foreign Currency Translation"
below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.
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
investment, to its shareholders. Therefore, no federal income tax provision is
required. For Federal income tax purposes, net currency exchange gains and
losses from sales of foreign debt securities may 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 principals. Dividends paid by the Fund with
respect to each class of shares will be calculated in the same manner, at the
same time and will be in the same amount, except for the effect of expenses that
may be applied differently to each class as explained previously.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund. Expenses which are not 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.
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees 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.
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 the offset by the currency amount of
the underlying transaction.
There were no open forward foreign currency contracts at August 31,
1995.
FOREIGN CURRENCY TRANSLATION All assets or 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 and 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.
OPTIONS Listed options are valued at the last quoted sales price on the exchange
on which they are primarily traded. Over-the-counter options are valued at the
mean between the last bid and asked prices. Upon the writing of a call or put
option, an amount equal to the premium received by the Fund is included in the
Statement of Assets and Liabilities as an asset and corresponding liability. The
amount of the liability is subsequently marked-to-market to reflect the current
market value of the written option.
The Fund may use options contracts to manage its exposure to the stock
market. Writing puts and buying calls tend to increase the Fund's exposure to
the underlying instrument and buying puts and writing calls tend to decrease the
Fund's exposure to the underlying instrument, or hedge other Fund investments.
The maximum exposure to loss for any purchased options is limited to the
premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value reflects the maximum exposure of
the Fund in these contracts, but the actual exposure is limited to the change in
value of the contract over the period the contract remains open.
Risks may also arise if counterparties do not perform under the
contracts' terms, or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
options have minimal credit risk as the exchanges act as counterparties to each
transaction, and only present liquidity risk in highly unusual market
conditions. To minimize credit and liquidity risks in over-the-counter option
contracts, the Fund continuously monitors the creditworthiness of all its
counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's period-end
Statement of Assets and Liabilities.
There were no written option transactions for the period ended August
31, 1995.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects of
fluctuations in interest rates, currency exchange rates and other market
conditions. At the time the Fund enters into a financial futures contract, it is
required to deposit with its custodian a specified amount of cash or U.S.
government securities, known as "initial margin", equal to a certain percentage
of the value of the financial futures contract being traded. Each day, the
futures contract is valued at the official settlement price of the board of
trade or U.S. commodities exchange. Subsequent payments, known as "variation
margin", to and from the broker are made on a daily basis as the market price of
the financial futures contract fluctuates. Daily variation margin adjustments,
arising from this "mark to market", are recorded by the Fund as unrealized gains
or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there may be an
illiquid market and/or that a change in the value of the contracts 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 August 31, 1995, there were no open positions in financial futures
contracts.
ORGANIZATION EXPENSES Expenses incurred in connection with the organization of
the Fund have been capitalized and are being charged to the Fund's operations
ratably over a five-year period that commenced with the investment operations of
the Fund.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on securities
purchased from either the date of issue or the date of purchase over the life of
the security, as required by the Internal Revenue Code.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND
TRANSACTIONS WITH AFFILIATES AND OTHERS
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) 0.80% of the first $200,000,000 of the Fund's
average daily net asset value and (b) 0.70% of the Fund's average daily net
asset value in excess of $200,000,000.
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.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1, 1995, JH
Funds was known as John Hancock Broker Distribution Services, Inc. For the
period ended August 31, 1995, JH Funds received net sales charges of $133,497.
Out of this amount $45,279 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $35,023 was paid as sales
commissions to sales personnel of unrelated broker-dealers and $53,195 was paid
as sales commissions to personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony Incorporated ("Tucker Anthony") and Sutro &
Co., Inc. ("Sutro"),
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
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 August 31,
1995, contingent deferred sales charges paid to Broker Services amounted to
$8,629.
In addition, to compensate JH Funds for the services it provides as
distributor 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 makes 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 average daily net assets to
reimburse JH Funds for its 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.
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. Effective January 1, 1995, the Fund pays
transfer agent fees based on transaction volume and the number of shareholder
accounts. Prior to January 1, 1995, the Fund paid a monthly transfer agent fee
equivalent, on an annual basis, to 0.40% and 0.42% of the Fund's 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 proxy
mailings.
The Fund has an independent advisory board composed of scientific and
medical experts who provide the investment officers of the Fund with advice and
consultation on health care developments, for which the Fund pays the advisory
board a fee.
Messrs. Edward J. Boudreau, Jr. and 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.
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 marked to market on a periodic basis and income earned by the investment
will be recorded on the Fund's books.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended August 31, 1995, aggregated $13,922,461 and
$8,715,229, respectively. There were no purchases or sales of long-term
obligations of the U.S. government and its agencies during the period ended
August 31, 1995.
The cost of investments owned at August 31, 1995 (including the joint
repurchase agreement) for federal income tax purposes was $20,345,894. Gross
unrealized appreciation and depreciation of investments aggregated $10,800,686
and $326,785, respectively, resulting in net unrealized appreciation of
$10,473,901.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
NOTE D --
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended August 31, 1995 the Fund has reclassified amounts to
reflect an increase in accumulated net realized gain on investments of $7,031, a
decrease in accumulated net investment loss of $506,007 and a decrease in
capital paid-in of $513,038. This represents the cumulative amount necessary to
report these balances on a tax basis, excluding certain temporary differences,
as of August 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 principles.
19
<PAGE> 20
John Hancock Funds - Global Rx Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock Global Rx Fund and the Trustees of John
Hancock World Fund
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 Rx Fund (the
"Fund") (a portfolio of John Hancock World Fund) at August 31, 1995, the results
of its operations for the year then ended, and 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 August 31, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
October 17, 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 August 31,
1995.
The Fund has not paid any distributions of dividends or net realized gains
during the fiscal year.
20
<PAGE> 21
NOTES
John Hancock Funds - Global Rx Fund
21
<PAGE> 22
NOTES
John Hancock Funds - Global Rx Fund
22
<PAGE> 23
NOTES
John Hancock Funds - Global Rx Fund
23
<PAGE> 24
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FIRM U.S. Postage
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 PAID
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 Rx
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 2800A 8/95
