<PAGE> 1
John Hancock Funds
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PACIFIC BASIN
EQUITIES 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
INVESTMENT SUB-ADVISERS
John Hancock Advisers International Limited
34 Dover Street
London, England W1X3RA
Indosuez Asia Advisers Limited
One Exchange Square
Suite 2606-2608
Hong Kong
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
BY DAVID S. BECKWITH
FOR THE PORTFOLIO MANAGEMENT TEAM
JOHN HANCOCK
PACIFIC BASIN EQUITIES FUND
STRONGER U.S. DOLLAR IGNITES LATE-SUMMER RALLY IN JAPAN;
EMERGING MARKETS STABLE BUT DULL
A more hospitable investment climate in Asia boosted performance during the
second half of the Fund's fiscal year, but not enough to offset earlier losses.
In Japan, where trade friction with the United States and a weak dollar had long
undermined stocks, the dollar's recent strength contributed to a 20% jump in
prices from early July 1995 through the end of August. Meanwhile in Asia's
emerging markets, sentiment improved as investors overcame the debilitating
effect of a string of international crises -- from the surprise devaluation of
the Mexican peso last December to the collapse of Barings bank in February.
While Asian emerging markets on the whole have been fairly quiet in recent
months, Hong Kong has recovered nicely, helped by declining interest rates in
the United States. The Fund's above-average stake in Hong Kong probably helped
it outperform other Pacific region funds during the period. For the year ended
August 31, 1995, John Hancock Pacific Basin Equities Fund's Class A and Class B
shares had total returns of -7.65% and -8.38%, respectively, at net asset value.
That was better than the average Pacific region fund, which lost 10.00% during
the same period, according to Lipper Analytical Services.1 In the paragraphs
that follow, we'll take a closer look at the Fund's performance, region by
region, beginning with Japan.
[A 2 3/4" x 2 1/2" photo of David S. Beckwith at bottom center. Caption reads:
"David S. Beckwith, Portfolio Manager."]
JAPAN
Thanks to a concerted effort by the world's central banks, the dollar
recovered smartly versus the yen late in the summer, cheering Japanese
[CAPTION]
"A MORE HOSPITABLE CLIMATE IN ASIA ... DURING THE SECOND HALF ... NOT ENOUGH TO
OFFSET EARLIER LOSSES."
3
<PAGE> 4
John Hancock Funds - Pacific Basin Equities Fund
[Pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into 11 sections. Going from top left to right:
Short-Term Investments and Other 4%, Hong Kong 20%, Indonesia 3%, Australia 13%,
Korea, 4%, Japan, 22%, Malaysia 9%, New Zealand 4%, Philippines 2%, Singapore
13%, Thailand, 6%. Footnote below reads: "As a percentage of net assets on
August 31, 1995."]
exporters and spurring a sharp rally in Japanese markets. While the Fund's stake
in Japan declined during the year from 31% of net assets to 22%, Japan and Hong
Kong remain the focal points of the Fund's investments. Internally, our focus
has shifted somewhat in recent months. We sold on strength some of the Fund's
industrial stocks, including Sumitomo Osaka Cement and steel producer NKK, which
had surged with the demand for building materials following the Kobe earthquake.
We also added to the Fund's stake in retailers such as Marui and Jusco. Retail
stocks tend to perform well in the early stages of economic recovery.
HONG KONG
With its close ties to U.S. financial markets, Hong Kong is especially sensitive
to movements in U.S. interest rates. That was a disadvantage during much of 1994
but an advantage in 1995 as U.S. interest rates peaked and Hong Kong stocks
rallied, climbing 12% from the beginning of the year through the end of August.
The Fund's largest local investment at the end of the period was a bank, HSBC
Holdings, one of several investments in interest-rate-sensitive sectors such as
finance and real estate. We preserved large holdings as well in CITIC Pacific
and Swire Pacific, both broad-based conglomerates with good exposure to China.
Overall, our stake in Hong Kong declined slightly to 20% of the Fund's net
assets. Because earnings growth has slowed in recent months, we may look for
opportunities to trim our Hong Kong holdings further in the months ahead.
AUSTRALIA/NEW ZEALAND
Australia and New Zealand collectively accounted for about 17% of the Fund's net
assets at the end of the period. Traditionally we've emphasized mining and
natural resources stocks in this part of the world, but here, too, our focus has
begun to shift towards other sectors. While we still have large stakes in Broken
Hill Proprietary, an Australian natural resources conglomerate, and Carter Holt
Harvey, a New Zealand building products company, those stocks have not been top
performers lately. On the other hand, News Corp., the Australian media
conglomerate, surged during the period, buoyed by the wave of media mergers and
consolidations in the United States. Another example of our growing
diversification in the region is Woolworth's, an Australian retailer not to be
confused with the U.S. company of the same name.
[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 News Corp.
followed by an up arrow and the phrase "Buoyed by industry mergers." The second
listing is Carter Holt Harvey followed by a sideways arrow and the phrase
"Momentum slowed." The third listing is Aokam Perdana followed by a down arrow
and the phrase "Disappointing earnings." Footnote below reads: "See "Schedule of
Investments." Investment holdings are subject to change."]
[CAPTION]
"JAPAN AND HONG KONG REMAIN THE FOCAL POINTS OF THE FUNDS INVESTMENTS."
4
<PAGE> 5
John Hancock Funds - Pacific Basin Equities 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 3% from bottom to top, with 0% at the top and -12% at
the bottom. Within the chart there are three solid bars. The first represents
the -7.65% total return for the John Hancock Pacific Basin Equities Fund: Class
A. The second represents the -8.38% total return for the John Hancock Pacific
Basin Equities Fund: Class B. The third represents the -10.00% total return for
the average Pacific region fund. A footnote below reads: "The total returns for
John Hancock Pacific Basin Equities Fund are at net asset value with all
distributions reinvested. The average pacific region fund is tracked by Lipper
Analytical Services. (1) See following page for historical performance
information."]
SINGAPORE/MALAYSIA/THAILAND
Asia's emerging markets have stabilized since the wave of international crises
last winter but have failed so far to recapture much interest from investors,
resulting in flat returns. In Singapore, which accounts for 13% of the Fund's
net assets, our largest investments are Keppel, a conglomerate involved in
banking, property and shipping; and Fraser & Neave, which recently got the green
light to build a bottling plant in Ho Chi Minh City. In Malaysia, we had bad
luck with a building products company that reported disappointing earnings. In
Thailand, our main holding is Bangkok Bank, a play on economic growth in the
Pacific Rim. In recent months we've established a small position -- about 4% --
in Korea, with stocks such as Samsung Electronics and Korea Electric Power. Both
are well-run companies with established market positions. They're likely to
attract growing interest from investors as Korea becomes more accessible to
foreigners.
OUTLOOK
Asian markets have been in a consolidation phase since the heady days of 1993,
when stock prices soared throughout the region. That's been true despite the
fact that Asia remains the fastest growing region of the world economy. As
growth translates into earnings, and valuations such as price-to-earnings ratio
continue to improve, Asian markets seem poised for an eventual recovery. The
timing, however, remains a question mark. Meanwhile, we'll continue our search
for top companies in promising industries. One trend we'll be watching is the
growing market for home computers in Japan, where market penetration currently
is only about 12%, compared to more than 35% in the United States. That has
positive long-term implications for Japanese technology stocks, many of which
are cheaper today than their U.S. counterparts.
- -------------------------------------------------------------------------------
(1)Figures from Lipper Analytical Services include reinvested dividends and do
not take into account sales charges. Actual load-adjusted performance is lower.
International investing involves special risks, including currency and political
risks and differences in accounting standards and financial reporting.
[CAPTION]
"...ASIAN MARKETS SEEM POISED FOR AN EVENTUAL RECOVERY."
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 Pacific Basin Equities 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
September 8, 1987 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.
CUMMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
ONE FIVE LIFEOF
YEAR YEARS FUND
---- ----- ----
<S> <C> <C> <C>
Pacific Basin Equities Fund: Class A (8.56%) 35.20% 71.64%(1)
Pacific Basin Equities Fund: Class B (9.25%) (9.51%)(1) N/A
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
ONE FIVE LIFEOF
YEAR YEARS FUND
---- ----- ----
<S> <C> <C> <C>
Pacific Basin Equities Fund: Class A (8.56%) 6.22% 7.16%(1)
Pacific Basin Equities Fund: Class B (9.25%) (7.24%)(1) N/A
</TABLE>
NOTES TO PERFORMANCE
(1) Class A shares started on September 8, 1987, 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
Pacific Basin Equities Fund would be worth on August 31, 1995, assuming you had
been invested 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
Morgan Stanley Capital International Pacific Index -- an unmanaged index that
measures performance for a diverse range of global stock markets, including
Australia, Hong Kong, Japan, New Zealand, and Singapore/Malaysia.
JOHN HANCOCK PACIFIC BASIN EQUITIES FUND
CLASS A SHARES
[Line chart with the heading John Hancock Pacific Basin Equities 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 Pacific Basin Equities Fund on September 8, 1987, before
sales charge, and is equal to $18,439 as of August 31, 1995. The second line
represents the John Hancock Pacific Basin Equities Fund after sales charge and
is equal to $17,511 as of August 31, 1995. The third line represents the value
of the Morgan Stanley Capital International Pacific Index and is equal to
$11,388 as of August 31, 1995.]
JOHN HANCOCK PACIFIC BASIN EQUITIES FUND
CLASS B SHARES
[Line chart with the heading John Hancock Pacific Basin Equities 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 Morgan Stanley Capital International
Pacific Index and is equal to $9,617 as of August 31, 1995. The second line
represents the value of the hypothetical $10,000 investment made in the John
Hancock Pacific Basin Equities Fund on March 7, 1994, before sales charge, and
is equal to $9,605 as of August 31, 1995. The third line represents the John
Hancock Pacific Basin Equities Fund after sales charge and is equal to $9,220 as
of August 31, 1995.]
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
- -------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $47,312,553) ............... $49,005,664
Joint repurchase agreement (cost - $404,000) ..... 404,000
-----------
49,409,664
Cash .............................................. 628
Foreign currency, at value (cost - $2,298,631) .... 2,162,102
Receivable for shares sold ........................ 29,712
Receivable for investments sold ................... 547,615
Interest receivable ............................... 65
Dividends receivable .............................. 49,116
-----------
Total Assets .................... 52,198,902
-----------------------------------------------
LIABILITIES:
Payable for shares repurchased .................... 35,871
Payable for investments purchased ................. 103,467
Foreign taxes payable ............................. 61,007
Payable to John Hancock Advisers, Inc. and
affiliates - Note B .............................. 129,914
Accounts payable and accrued expenses ............. 83,754
-----------
Total Liabilities ............... 414,013
-----------------------------------------------
NET ASSETS:
Capital paid-in ................................... 50,963,701
Accumulated net realized loss on investments and
foreign currency transactions .................... (684,988)
Net unrealized appreciation of investments and
foreign currency transactions .................... 1,506,176
-----------
Net Assets ...................... $51,784,889
===============================================
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 - $37,417,107 / 2,651,955 ................. $ 14.11
=================================================================
Class B - $14,367,782 / 1,029,129 ................. $ 13.96
=================================================================
MAXIMUM OFFERING PRICE PER SHARE *
Class A - ($14.11 x 105.26%) ...................... $ 14.85
=================================================================
</TABLE>
* 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 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.
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
Year ended August 31, 1995
- -----------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $72,607) $1,046,882
Interest .............................................. 117,947
----------
1,164,829
----------
Expenses:
Investment management fee - Note B ................... 430,725
Transfer agent fee - Note B
Class A ............................................ 167,564
Class B ............................................ 60,092
Custodian fee ........................................ 126,116
Distribution/service fee - Note B
Class A ............................................ 124,405
Class B ............................................ 123,724
Registration and filing fees ......................... 58,256
Printing ............................................. 40,987
Auditing fee ......................................... 30,750
Legal fees ........................................... 17,384
Trustees' fees ....................................... 6,024
Miscellaneous ........................................ 5,526
----------
Total Expenses ...................... 1,191,553
---------------------------------------------------
Net Investment Loss ................. (26,724)
---------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments sold ................. (761,693)
Net realized loss on foreign currency transactions .... ( 47,300)
Change in net unrealized appreciation/depreciation
of investments ....................................... (3,737,328)
Change in net unrealized appreciation/depreciation
of foreign currency transactions ..................... (59,090)
Net Realized and Unrealized ----------
Loss on Investments and
Foreign Currency Transactions ....... (4,605,411)
===================================================
Net Decrease in Net Assets
Resulting from Operations ........... $(4,632,135)
===================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities 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.................................................................................. $ (26,724) $ (270,589)
Net realized gain (loss) on investments sold and foreign currency transactions....................... (808,993) 2,359,655
Change in net unrealized appreciation/depreciation of investments and foreign currency transactions.. (3,796,418) 4,022,518
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from Operations..................................... (4,632,135) 6,111,584
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain on investments sold and foreign currency transactions
Class A - ($0.5482 and $0.4050 per share, respectively)............................................. (1,615,390) (815,022)
Class B** - ($0.5482 and none per share, respectively).............................................. (485,450) --
------------ -----------
Total Distributions to Shareholders............................................................... (2,100,840) (815,022)
------------- -----------
FROM FUND SHARE TRANSACTIONS -- NET*................................................................... (1,223,114) 39,876,044
------------ -----------
NET ASSETS:
Beginning of period.................................................................................. 59,740,978 14,568,372
------------ -----------
End of period........................................................................................ $51,784,889 $59,740,978
============ ===========
* 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...................................................... 1,831,046 $25,781,273 3,060,288 $ 45,798,982
Shares issued to shareholders in reinvestment of distributions... 112,000 1,558,965 50,799 779,990
---------- ----------- ----------- ------------
1,943,046 27,340,238 3,111,087 46,578,972
Less shares repurchased.......................................... (2,455,590) (34,756,404) (1,044,694) (15,671,855)
---------- ----------- ----------- ------------
Net increase (decrease).......................................... (512,544) $(7,416,166) 2,066,393 $ 30,907,117
========== =========== =========== ============
CLASS B **
Shares sold...................................................... 1,880,511 $26,138,987 633,031 $ 9,493,869
Shares issued to shareholders in reinvestment of distributions... 31,341 434,079 -- --
---------- ----------- ----------- ------------
1,911,852 26,573,066 633,031 9,493,869
Less shares repurchased.......................................... (1,481,266) (20,380,014) (34,488) (524,942)
---------- ----------- ----------- ------------
Net increase..................................................... 430,586 $ 6,193,052 598,543 $ 8,968,927
========== =========== =========== ============
</TABLE>
**Class B shares commenced operations on March 7, 1994
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities 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>
YEAR ENDED AUGUST 31,
-----------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period............................... $ 15.88 $ 13.27 $ 8.87 $ 9.05 $10.34
------- ------- ------- ------ ------
Net Investment Income (Loss)....................................... 0.02(a)(d) (0.10)(a) (0.11)(a) (0.07)(a) (0.01)
Net Realized and Unrealized Gain (Loss) on Investments and Foreign
Currency Transactions............................................. (1.24) 3.12 4.51 (0.11) (0.33)
------- ------- ------- ------ ------
Total from Investment Operations.................................. (1.22) 3.02 4.40 (0.18) (0.34)
------- ------- ------- ------ ------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and
Foreign Currency Transactions..................................... (0.55) (0.41) -- -- (0.95)
------- ------- ------- ------ ------
Total Distributions............................................... (0.55) (0.41) -- -- (0.95)
------- ------- ------- ------ ------
Net Asset Value, End of Period..................................... $ 14.11 $ 15.88 $ 13.27 $ 8.87 $ 9.05
======= ======= ======= ====== ======
Total Investment Return at Net Asset Value......................... (7.65%) 22.82% 49.61% (1.99%) (2.15%)
Total Adjusted Investment Return at Net Asset Value (c)(e)......... -- -- 48.31% (5.57%) (5.19%)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).......................... $37,417 $50,261 $14,568 $3,222 $4,065
Ratio of Expenses to Average Net Assets**.......................... 2.05% 2.43% 2.94% 2.73% 2.75%
Ratio of Adjusted Expenses to Average Net Assets (c)............... -- -- 4.24% 6.31% 5.79%
Ratio of Net Investment Income (Loss) to Average Net Assets........ 0.13%(d) (0.66%) (0.98%) (0.82%) (0.06%)
Ratio of Adjusted Net Investment Loss to Average Net Assets (c).... -- -- (2.28%) (4.40%) (3.10%)
Portfolio Turnover Rate............................................ 48% 68% 171% 179% 151%
**Expense Reimbursement Per Share.................................. -- -- $ 0.14 $ 0.31 $ 0.24
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: NET INVESTMENT INCOME, 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 - Pacific Basin Equities 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......................................................... $ 15.84 $15.11(b)
------- ------
Net Investment Loss.......................................................................... (0.09)(a) (0.09)(a)
Net Realized and Unrealized Loss on Investments and Foreign Currency Transactions............ (1.24) 0.82
------- ------
Total from Investment Operations............................................................ (1.33) 0.73
------- ------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and Foreign Currency Transactions... (0.55) --
------- ------
Total Distributions......................................................................... (0.55) --
------- ------
Net Asset Value, End of Period............................................................... $ 13.96 $15.84
======= ======
Total Investment Return at Net Asset Value................................................... (8.38%) 4.83%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).................................................... $14,368 $9,480
Ratio of Expenses to Average Net Assets...................................................... 2.77% 3.00%*
Ratio of Net Investment Loss to Average Net Assets........................................... (0.66%) (1.40%)*
Portfolio Turnover Rate...................................................................... 48% 68%
<FN>
* On an annualized basis.
** Class B shares commenced operations on March 7, 1994.
(a) On average month end shares outstanding.
(b) Initial price at commencement of operations.
(c) On an unreimbursed basis without expense reduction.
(d) 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.
(e) Unaudited.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
PACIFIC BASIN EQUITIES FUND ON AUGUST 31, 1995. IT'S DIVIDED INTO TWO MAIN
CATEGORIES: COMMON STOCKS AND SHORT-TERM INVESTMENTS. COMMON STOCKS ARE FURTHER
BROKEN DOWN BY COUNTRY. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S
"CASH" POSITION, ARE LISTED LAST.
<TABLE>
SCHEDULE OF INVESTMENTS
August 31, 1995
- -------------------------------------------------------------------------------------
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- ----------
<S> <C> <C>
COMMON STOCKS
AUSTRALIA (12.50%)
Amcor Ltd. (Paper)............................ 160,000 $1,246,222
Australian National Industries Ltd.
(Diversified Operations)..................... 730,000 642,132
Broken Hill Proprietary Co., Ltd.
(Diversified Operations)..................... 121,000 1,755,733
News Corp. Ltd. (The) (Publishing)............ 207,000 1,188,993
TNT Ltd. (Transportation)..................... 365,600* 497,509
Woolworth's Ltd. (Retail)..................... 501,000* 1,145,057
----------
6,475,646
----------
HONG KONG (19.91%)
Amoy Properties Ltd. (Real Estate)............ 550,000* 493,799
Cheung Kong (Holdings) Ltd.
(Real Estate)................................ 150,000 744,090
CITIC Pacific Ltd. (Diversified Operations)... 400,000 1,139,388
Harbin Power Equipment Co., Ltd.
(Machinery)**................................ 1,300,000* 310,683
Hongkong Electric Holdings Ltd.
(Utilities).................................. 300,000 1,040,563
Hong Kong Telecommunications Ltd.
(Telecommunications)......................... 200,000* 361,710
HSBC Holdings Ltd. (Banks).................... 130,000 1,746,544
Hutchison Whampoa Ltd,
(Diversified Operations)..................... 180,000* 867,330
Hysan Development Co., Ltd.
(Real Estate)................................ 380,000* 797,701
Sun Hung Kai Properties Ltd.
(Real Estate)................................ 160,000 1,162,641
Swire Pacific Ltd. (A Shares)
(Diversified Operations)..................... 170,000 1,273,737
Yizheng Chemical Fibre Co., Ltd.
(Chemicals).................................. 1,250,000* 371,399
-----------
10,309,585
-----------
INDONESIA (3.23%)
PT Bank International Indonesia (Banks)....... 239,800 867,575
PT Indonesian Satellite, American
Depositary Receipts
(Telecommunications)......................... 20,000* 702,500
PT Semen Gresik (Building Products) # 35,000* 105,008
-----------
1,675,083
-----------
JAPAN (21.83%)
Daido Steel Co., Ltd. (Steel)................. 200,000 $ 1,012,581
Fanuc Ltd. (Machinery)........................ 18,000 822,952
Itochu Corp. (Diversified Operations)......... 200,000 1,243,735
Jusco Co., Ltd. (Retail)...................... 63,000 1,411,169
Marui Co., Ltd. (Retail)...................... 69,000 1,213,869
Matsushita Electric Industrial Co., Ltd.
(Electronics)................................ 60,000* 938,938
Minebea Co., Ltd. (Machinery)................. 100,000* 777,335
Sanwa Bank Ltd. (Banks)....................... 39,000* 745,934
Seino Transportation Co., Ltd.
(Transportation)............................. 50,000 833,589
Sumitomo Trust & Banking Co., Ltd.
(The) (Banks)................................ 110,000* 1,496,369
Toshiba Corp. (Electronics)................... 112,000 808,755
-----------
11,305,226
-----------
KOREA (3.91%)
Korea Line Co. (Transportation)............... 12,000* 364,718
Korea Electric Power Corp. (Utilities)........ 22,000* 773,927
L.G. Chemical Ltd. (Chemicals)................ 10,000* 208,226
Samsung Electronics Co. (Electronics)**....... 3,700* 669,943
Samsung Electronics Co. (Ord New 3)...........
(Electronics)**.............................. 45* 8,148
-----------
2,024,962
-----------
MALAYSIA (8.53%)
Aokam Perdana Berhad
(Building Products).......................... 170,400 416,609
DCB Holdings Berhad (Banks)................... 120,000* 355,912
Land & General Berhad (Real Estate)........... 450,000 1,442,886
Petronas Gas Berhad (Oil & Gas)**............. 43,000* 137,876
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities Fund
<TABLE>
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----------
<S> <C> <C>
MALAYSIA (CONTINUED)
Resorts World Berhad (Leisure &
Recreation).................................... 250,000* $ 1,302,605
Sime Darby Berhad (Diversified
Operations).................................... 300,000* 763,527
-----------
4,419,415
-----------
NEW ZEALAND (3.86%)
Brierley Investments Ltd. (Diversified
Operations).................................... 735,000* 544,940
Carter Holt Harvey Ltd. (Building
Products)...................................... 393,600 895,942
Telecom Corporation of New Zealand
(Telecommunications)........................... 140,000 555,411
-----------
1,996,293
-----------
PHILIPPINES (2.09%)
Benpres Holdings Corp., Global
Depositary Receipts
(Diversified Operations)**..................... 2,000* 14,500
Manila Electric Co. (B Shares) (Utilities)...... 71,800* 570,633
Pilipino Telephone Corp.
(Telecommunications)**......................... 513,000* 494,792
-----------
1,079,925
-----------
SINGAPORE (13.01%)
Fraser & Neave Ltd. (Beverages)................. 100,000 1,132,845
Hongkong Land Holdings Ltd.
(Real Estate).................................. 280,000 509,600
Jardine Matheson Holdings Ltd.
(Diversified Operations)....................... 130,000 936,000
Keppel Corp. Ltd. (Diversified
Operations).................................... 160,000 1,283,422
Oversea-Chinese Banking Corp, (Banks) 62,000* 698,002
Singapore Press Holdings Ltd.
(Publishing)................................... 82,440 1,136,943
United Overseas Bank Ltd. (Banks) 120,000* 1,038,559
-----------
6,735,371
-----------
THAILAND (5.76%)
Bangkok Bank (Banks)............................ 125,000 1,396,648
Electricity Generating Public Co., Ltd.
(Utilities)**.................................. 110,000* 344,573
Italian-Thai Development Public Co., Ltd.
(Construction)................................. 64,000* 735,515
Shinawatra Computer and Communication
Public Co., Ltd. (Telecommunications).......... 22,000* 507,422
-----------
2,984,158
-----------
TOTAL COMMON STOCKS
(Cost $47,312,553) (94.63%) 49,005,664
------- -----------
</TABLE>
<TABLE>
<CAPTION>
INTREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------- ------- --------------- ------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (0.78%)
Investment in a joint repurchase
agreement transaction with UBS
Securities Inc. - Dated 08-31-95,
Due 09-01-95 (secured by U.S.
Treasury Bill, 5.540% Due 05-30-96
and by U.S. Treasury Note, 5.625%
Due 01-31-98) - Note A.............. 5.80% $ 404 $ 404,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $404,000) (0.78%) 404,000
------- -----------
TOTAL INVESTMENTS (95.41%) $49,409,664
======= ===========
<FN>
* Securities, other than short-term investments, newly added to the portfolio during the year ended August 31, 1995.
** Non-income producing security.
# Security purchased on a delayed delivery basis. The Fund has segregated cash equal to the amount of the delayed
delivery security. The price of the underlying security and the date when the security will be delivered and paid
for are fixed at the time the transaction is negotiated. 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 - Pacific Basin Equities Fund
INDUSTRY DIVERSIFICATION (Unaudited)
- --------------------------------------------------------------------------------
THE FUND PRIMARILY INVESTS IN SECURITIES ISSUED BY COMPANIES OF OTHER COUNTRIES,
PRIMARILY IN THE PACIFIC BASIN REGION. THE PERFORMANCE OF THE FUND IS CLOSELY
TIED TO THE ECONOMIC CONDITIONS WITHIN THE COUNTRIES IT INVESTS. THE
CONCENTRATION OF INVESTMENTS BY COUNTRY FOR INDIVIDUAL SECURITIES HELD BY THE
FUND IS SHOWN IN THE SCHEDULE OF INVESTMENTS. IN ADDITION, THE CONCENTRATION OF
INVESTMENTS CAN BE AGGREGATED BY VARIOUS INDUSTRY GROUPS. THE TABLE BELOW SHOWS
THE PERCENTAGES OF THE FUND'S INVESTMENTS AT AUGUST 31, 1995 ASSIGNED TO THE
VARIOUS INVESTMENT CATEGORIES.
<TABLE>
<CAPTION>
MARKET VALUE OF
SECURITIES AS A
INVESTMENT CATEGORIES % OF NET ASSETS
- --------------------- ---------------
<S> <C>
Banks....................................................... 16.12%
Beverages................................................... 2.19
Building Products........................................... 2.74
Chemicals................................................... 1.12
Construction................................................ 1.42
Diversified Operations...................................... 20.21
Electronics................................................. 4.68
Leisure & Recreation........................................ 2.51
Machinery................................................... 3.69
Oil & Gas................................................... 0.27
Paper....................................................... 2.41
Publishing.................................................. 4.49
Real Estate................................................. 9.95
Retail...................................................... 7.28
Steel....................................................... 1.95
Telecommunications.......................................... 5.06
Transportation.............................................. 3.27
Utilities................................................... 5.27
Short-Term Investments...................................... 0.78
-----
TOTAL INVESTMENTS 95.41%
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities 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 Pacific Basin Equities Fund (the
"Fund"), John Hancock Global Rx 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 large 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 TRANSACTION 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 its taxable income, including any net realized gain on
investments, to its shareholders. For federal income tax purposes, the Fund has
$586,066 of capital loss carryforwards available, to the extent provided by
regulations, to offset future net realized capital gains. To the extent that
such carryforwards are used by the Fund, no capital gain distribution will be
made. The carryforward expires on August 31, 2003. Expired capital loss
carryforwards are reclassified to capital paid-in, in the year of expiration.
Additionally, net capital losses of $67,979 attributable to security
transactions incurred after October 31, 1994 are treated as arising on the first
day (September 1, 1995) of the Fund's current taxable year. For federal income
tax purposes, net currency exchange gains and losses from sales of foreign debt
securities must be treated as ordinary income even though such items are gains
and losses for accounting purposes.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date or, in the case of some foreign securities,
on the date thereafter when the Fund is made aware of the dividend. Interest
income on investment securities is recorded on the accrual basis. Foreign income
may be subject to foreign withholding taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net investment income
and realized gains on the ex-dividend date. Such distributions are determined in
conformity with income tax regulations, which may differ from generally accepted
accounting 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
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities Fund
in the same amount, except for the effect of expenses that may be applied
differently to each class as explained previously.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund. Expenses which are not readily identifiable to a specific
Fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees, if any, are calculated daily at the class level based
on the appropriate net assets of each class and the specific expense rate(s)
applicable to each class.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into forward
foreign currency exchange contracts as a hedge against the effect of
fluctuations in currency exchange rates. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date at a set price. The aggregate principal amounts of the contracts are
marked-to-market daily at the applicable foreign currency exchange rates. Any
resulting unrealized gains and losses are included in the determination of the
Fund's daily net assets. The Fund records realized gains and losses at the time
the forward foreign currency contract is closed out or offset by a matching
contract. Risks may arise upon entering these contracts from potential inability
of counterparties to meet the terms of the contract and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
These contracts involve market or credit risk in excess of the unrealized
gain or loss reflected in the Fund's Statement of Assets and Liabilities. The
Fund may also purchase and sell forward contracts to facilitate the settlement
of foreign currency denominated portfolio transactions, under which it intends
to take delivery of the foreign currency. Such contracts normally involve no
market risk other than that offset by the currency amount of the underlying
transaction.
At August 31, 1995, there were no open forward foreign currency exchange
contracts.
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 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.
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
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 ("JHAI"), a wholly-owned subsidiary of the Adviser, under which JHAI,
subject to the review of the Trustees and overall supervision of the Adviser,
provides the Fund with investment management services and advice with respect
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities Fund
to that portion of the Fund's assets invested in countries other than the United
States and Canada. The Adviser and Indosuez Asia Advisers Limited ("IAAL") have
a second subadvisary contract. Pursuant to such contract, IAAL serves as
co-subadviser to the Fund with JHAI. IAAL provides additional expertise in Asian
and Pacific Basin countries.
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. The Adviser pays JHAI a quarterly
management fee equivalent, on an annual basis, to the sum of (a) 0.50% of the
first $200,000,000 of the Fund's average daily net asset value and (b) 0.4375%
of the Fund's average daily net asset value in excess of $200,000,000. As of
September 1, 1994, JHAI has waived all but 0.05% of their fee. The Adviser pays
IAAL a quarterly subadvisory fee at the annual rate of (a) 0.30% of the first
$100,000,000 of the Fund's average daily net assets managed by IAAL plus (b)
0.40% of the gross management fee received by the Adviser pursuant to the
investment management contract with respect to the Fund's average daily net
assets in excess of $100,000,000 which are managed by IAAL (the rate increases
to 50% on net assets in excess of $250,000,000).
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, net sales charges received with regard to sales of
Class A shares amounted to $216,466. Out of this amount, $20,415 was retained
and used for printing prospectuses, advertising, sales literature and other
purposes, $70,900 was paid as sales commissions to unrelated broker-dealers and
$125,151 was paid as sales commissions to sales personnel of John Hancock
Distributors, Inc. ("Distributors"), Tucker Anthony, Incorporated ("Tucker
Anthony") and Sutro & Co., ("Sutro"), all of which are broker dealers. The
Adviser's indirect parent, John Hancock Mutual Life Insurance Company, is the
indirect sole shareholder of Distributors and John Hancock Freedom Securities
Corporation and its subsidiaries, which include FDC, Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the 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 JH Funds amounted to $51,067.
In addition, to compensate JH Funds for the services it provides as
distributors of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments to JH Funds for
distribution and service expenses, at an annual rate not exceed 0.30% of Class A
average daily net assets and 1.00% of Class B average daily net assets to
reimburse 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.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities Fund
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, Class A and Class B
shares pay transfer agent fees based on transaction volume and the number of
shareholder accounts. Prior to January 1, 1995, the Fund paid Investor Services
a monthly transfer agent fee equivalent, on an annual basis, to 0.40% and 0.42%
of the average daily net asset value of Class A and Class B shares of the Fund,
respectively, plus out-of-pocket expenses incurred by Fund Services on behalf of
the Fund for proxy mailings.
Messrs. Edward J. Boudreau, Jr., Francis C. Cleary, 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 Adviser owns 10,000 shares of beneficial
interest of the Fund. Trustee Edward J. Boudreau, Jr. is Managing Director of
JHAI. The compensation of unaffiliated Trustees is borne by the Fund. Effective
with the fees paid for 1995, the unaffiliated Trustees may elect to defer for
tax purposes their receipt of this compensation under the John Hancock Group of
Funds Deferred Compensation Plan. The Fund will make investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation liability
will be recorded on the Fund's books as an other asset. The deferred
compensation liability 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 $24,184,740 and
$26,307,535, respectively. There were no purchases or sales of 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 $47,747,494. Gross
unrealized appreciation and depreciation of investments aggregated $4,323,146
and $2,660,976, respectively, resulting in net unrealized appreciation of
$1,662,170.
NOTE D --
RECLASSIFICATION OF ACCOUNTS
During the year ended August 31, 1995, the Fund has reclassified amounts to
reflect a decrease in accumulated net realized loss on investments of $135,800,
a decrease in accumulated net investment loss of $26,724 and a decrease in
capital paid-in of $162,524. 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 principle.
18
<PAGE> 19
John Hancock Funds - Pacific Basin Equities Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock Pacific Basin Equities 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 Pacific Basin Equities
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 distributed to shareholders of record December 23, 1994 and paid on
December 29, 1994, a capital gain dividend of $649,953. Shareholders were mailed
a 1994 U.S. Treasury Department Form 1099-DIV in January 1995 representing their
proportionate share. It is anticipated that there will be a distribution from
sales of securities to shareholders of record on December 22, 1995 and payable
December 28, 1995. Shareholders will receive a 1995 U.S. Treasury Department
Form 1099-DIV in January 1996 representing their proportionate share.
None of the distributions qualify for the dividends received deduction
available to corporations.
19
<PAGE> 20
[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
Pacific Basin Equities 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 58001 8/95
