<PAGE> 1
JOHN HANCOCK FUNDS
- --------------------------------------------------------------------------------
GLOBAL
RETAIL 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.]
Educating shareholders has always been one of the most important
responsibilities of a mutual fund company. But that challenge has taken on new
significance in the past several years. Looking at the most recent statistics,
you can see why. According to the Investment Company Institute, the mutual fund
industry now manages more than $2.3 trillion for investors. More than half of
that money has come into mutual funds in just the last four years. Today, there
are more than 95 million mutual fund shareholder accounts. That's up from 12
million in 1980. These are people, like you, who are investing in mutual funds
to save for a home, to send their children to college or to build a nest egg for
a comfortable retirement. This explosive growth, coupled with the growing
complexity of the financial landscape, has made all of us in the mutual fund
industry work harder to inform our shareholders.
At John Hancock Funds, we strive to educate you about all aspects of
your fund: the performance, the strategies and the holdings. We want you to
fully understand what you own. We want you to have realistic expectations of the
potential rewards as well as the potential risks of your investment. These
shareholder reports -- which we send you twice a year -- are the best way to
give you the most in-depth and up-to-date information.
In the message that follows, the portfolio manager gives a candid
commentary on the market environment; the factors that affected performance; the
Fund's current investment strategies; and the outlook for the months ahead.
The ensuing financial statements provide a comprehensive look at the
Fund's statistics and holdings.
We hope you find these shareholder reports a useful tool in evaluating
your investments. Of course, if you have any questions or need more information,
feel free to call one of our customer service representatives on our toll-free
line at 1-800-225-5291, from 8:00 a.m. to 8:00 p.m. Eastern time, Monday through
Friday.
Sincerely,
/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY BERNICE S. BEHAR, PORTFOLIO MANAGER
JOHN HANCOCK
GLOBAL RETAIL FUND
Despite difficult environment for traditional
retail stocks, Fund posts strong returns
As they are traditionally defined, retail stocks have been in the doldrums for
the past several years. A far-reaching global recession, stagnant wages, job
loss and higher interest rates stymied consumer spending during the past five
years. And even as many of the world's major economies started to rebound last
year, consumers have remained much more selective in spending their
discretionary income. As a result, some of the more traditional retailers --
including apparel manufacturers and department stores -- have generally lagged
many other industry groups.
Despite this relatively negative environment for traditional retail
stocks, John Hancock Global Retail Fund has enjoyed strong returns since its
inception. From the Fund's first date of operation on September 29, 1994, to
August 31, 1995, it returned 35.61%, at net asset value. Meanwhile, the average
global fund returned 7.18% for the same period, according to Lipper Analytical
Services.(1)
[A 2 1/2" x 2" photo of Bernice S. Behar at bottom right. Caption reads:
"Bernice S. Behar, Portfolio Manager"]
STRATEGY EXPLAINED
In our view, the key to our success lies in recognizing that the definition of
retailer has changed in the 1990s . Previously, retailers were commonly
understood to be merchants who sold consumer goods within the confines of four
walls -- a store. Entering the new century, retailing is evolving and responding
to the electronic age. More companies are finding new ways to successfully reach
the consumer through the mail, telephone and other channels. One of our
strategies is to focus on those companies that are utilizing these
rapidly-growing distribution channels. And while we haven't abandoned the more
traditional retailers, we are heavily emphasizing those that have
[CAPTION]
"JOHN HANCOCK GLOBAL RETAIL FUND HAS ENJOYED STRONG RETURNS SINCE ITS
INCEPTION."
3
<PAGE> 4
John Hancock Funds - Global Retail Fund
[Chart with heading "Top Five Common Stock Holdings" at top of left hand column.
The chart lists five holdings: 1) America Online 3.7% 2) Nine West 3.6% 3)
Seattle Filmworks 3.6% 4) Micro Warehouse 3.3% 5) Daisytek International 3.3%. A
footnote below reads "As a percentage of net assets on August 31, 1995."]
carved out a strong market niche for themselves within a particular product
category. That means they aren't overly dependent on rising consumer spending to
be successful. Among both traditional and non-traditional retailers, our
preference is high-quality, well-managed retailers that have a demonstrated
ability to grow their earnings. As earnings rise, stock prices tend to rise as
well.
DIRECT MARKETERS
Thinking creatively about what constitutes a retailer has provided the Fund with
a broader universe of companies to explore. Many of these companies are helping
shape and benefit from a new consumer age. For example, technology-related
direct marketers have been some of our best performers since the Fund began.
These companies benefit from two powerful trends: the rapidly growing consumer
demand for computer hardware and software goods, and the growth of direct
marketing as a means to distribute those goods. Insight, one of our larger
holdings and biggest gainers, is an example of a company that has done both
things well. The company recently teamed up with Tandy Corporation -- owner of
Radio Shack -- to fulfill Tandy's direct marketing orders. Some of our other
favorites in this area include Global Direct, with roughly a quarter of its
sales coming from outside North America, and Micro Warehouse.
America Online was the Fund's biggest winner. We like it because it
capitalizes on the rising consumer demand for on-line services and, at the same
time, the growth of the Internet as a distinct distribution channel. Consumers
are using on-line services not only to access information, but to purchase goods
and services as well.
We also found direct marketer opportunities outside of technology.
Seattle Filmworks has been very successful in its core mail-in film processing
business and is poised to benefit from its entry into digital film processing.
By using this digital technology, consumers will be able to transfer their
photographs onto their personal computers. Amway Asia, one of our largest
international holdings, also has done quite well as consumer spending grows in
China. Door-to-door selling is popular in China, and the company has
successfully marketed its cleaning products using that channel.
TRADITIONAL RETAILERS
Among the more traditional retailers, we've focused on companies that are
successful in improving their market share, often at the expense of other
retailers. PetSmart, for example, is a specialty retailer that has been grabbing
market share from supermarkets, department stores,
[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 Seattle
Filmworks followed by an up arrow and the phrase "New product improves
revenues." The second listing is Elkjop followed by an up arrow and the phrase
"Successful expansion into Sweden." The third listing is Geerlings & Wade
followed by a down arrow and the phrase "Rising postal, paper and product cost."
Footnote below reads: "See "Schedule of Investments." Investment holdings are
subject to change."]
[CAPTION]
"...TECHNOLOGY-RELATED DIRECT MARKETERS HAVE BEEN SOME OF OUR BEST
PERFORMERS..."
4
<PAGE> 5
John Hancock Funds - Global Retail Fund
[Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the period Sept. 29, 1994 through 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 two solid bars. The
first represents the 35.61% total return for the John Hancock Global Retail
Fund. The second represents the 7.18% total return for the average global fund.
A footnote below reads: "The total return for John Hancock Global Retail Fund is
at net asset value with all distributions reinvested. The average global fund is
tracked by Lipper Analytical Services. (1) See following page for historical
performance information."]
discounters and other pet stores. The company is now the largest retailer of pet
supply products and services including food, grooming and medical care.
Likewise, the book store chains Barnes & Noble and Borders are increasing their
market shares.
We have found some of our most exciting opportunities abroad. Norway-
based Elkjop is a large consumer electronics retailer and distributor of
cellular phones. The company has recently experienced impressive revenue and
earnings gains as it expanded into Sweden, where it has rapidly gained market
share. New Zealand-based Warehouse Club is another example. The warehouse club
phenomenon has experienced much the same success in that country as it has in
the United States, and to meet that increased demand the company has built more
stores than it originally anticipated.
We have selectively invested in apparel retailers. Some of our
favorites are Tommy Hilfiger, a men's clothing retailer which has capitalized on
the trend to more casual workplace clothing; Nine West, the lowest-cost producer
of shoes in the United States; and Authentic Fitness, which has acquired
well-known brands including Speedo, Catalina and White Stag and is building
stores around these brands.
OUTLOOK
Consumer spending is beginning to account for an ever-increasing share of gross
domestic product in many areas of the world, including Asia and Latin America.
At the same time, retail stocks are getting more attention from investors in
these and other foreign markets. But the outlook for consumer spending -- which
is one of the main drivers of retail stocks -- remains mixed. So in our view,
the key to investing successfully in the retail sector will be to find areas in
which consumers will spend their discretionary dollars. Then we'll target
companies that can build a franchise in these niches, take market share from
their competitors and choose the right distribution channel -- either
traditional or non-traditional -- to distribute their wares.
- --------------------------------------------------------------------------------
(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 such as political and currency
risks and differences in accounting standards and financial reporting. Sector
investing is subject to additional risks than the market as a whole.
[CAPTION]
"...THE OUTLOOK FOR CONSUMERS SPENDING ... REMAINS MIXED."
5
<PAGE> 6
A LOOK AT PERFORMANCE
The table on the right shows the cumulative total returns for John Hancock
Global Retail 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 share. Performance figures include the maximum
applicable sales charge of 5% for Class A shares. Performance is affected by a
12b-1 plan. 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.
CUMULATIVE TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
LIFE OF
FUND(1)
-------
<S> <C>
John Hancock Global Retail Fund: Class A 15.12%(2)
</TABLE>
NOTES TO PERFORMANCE
(1) Operations commenced on September 29, 1994.
(2) Effective September 29, 1994, the Adviser has undertaken to limit the Fund's
expenses, including the management fee (but not including the transfer agent
fee and the 12b-1 fee) to 0.90% of the Fund's daily net asset value. Without
the limitation of expenses, the cumulative total return would have been
9.06% since inception.
6
<PAGE> 7
WHAT HAPPENED TO A $10,000 INVESTMENT...
The chart on the right shows how much a $10,000 investment in the John Hancock
Global Retail Fund would be worth on August 31, 1995, assuming you invested on
the day the fund started and 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.
[Line chart with the heading John Hancock Global Retail Fund 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 Retail Fund on September 29, 1994, before sales
charge, and is equal to $13,561 as of August 31, 1995. The second line
represents the John Hancock Global Retail Fund after sales charge and is equal
to $12,879 as of August 31, 1995. The third line represents the value of the
Standard & Poor's 500 Stock Index and is equal to $12,446 as of August 31,
1995.]
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Global Retail 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 (cost - $504,045) ............................. $ 702,152
Joint repurchase agreement (cost - $13,000) ................. 13,000
---------
715,152
Cash ......................................................... 83
Receivable for investments sold .............................. 13,593
Dividends receivable ......................................... 187
Foreign tax receivable ....................................... 118
Receivable from John Hancock Advisers, Inc. - Note B ......... 39,446
Deferred organization expenses - Note A ...................... 5,925
---------
Total Assets ............................... 774,504
------------------------------------------------------------
LIABILITIES:
Payable for investments purchased ............................ 10,004
Payable to John Hancock Advisers, Inc. and
affiliates - Note B ......................................... 14,281
Accounts payable and accrued expenses ........................ 38,619
---------
Total Liabilities .......................... 62,904
------------------------------------------------------------
NET ASSETS:
Capital paid-in .............................................. 525,920
Accumulated net realized loss on investments and
foreign currency transactions ............................... (12,423)
Net unrealized appreciation of investments and
foreign currency transactions ............................... 198,103
---------
Net Assets ................................. $ 711,600
============================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - unlimited number of shares
authorized with no par value)
Class A - $711,600/61,946 .................................... $ 11.49
================================================================================
MAXIMUM OFFERING PRICE PER SHARE *
Class A - ($11.49 x 105.26%) ................................. $ 12.09
================================================================================
</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 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
For the period September 29, 1994
(commencement of operations) to August 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest ..................................................... $ 5,433
Dividends (net of foreign withholding taxes of $258) ......... 2,773
---------
8,206
---------
Expenses:
Custodian fee ............................................... 23,750
Auditing fee ................................................ 7,500
Printing .................................................... 6,069
Investment management fee - Note B .......................... 4,205
Distribution/service fee - Note B ........................... 1,577
Transfer agent fee - Note B ................................. 1,577
Organization expense - Note A ............................... 1,341
Legal fees .................................................. 1,000
Registration and filing fees ................................ 150
Miscellaneous ............................................... 125
Trustees' fees .............................................. 37
---------
Total Expenses ............................. 47,331
------------------------------------------------------------
Less Expenses Reimbursable
by John Hancock Advisers, Inc. -
Note B ..................................... (39,446)
---------
Net Expenses ............................... 7,885
------------------------------------------------------------
Net Investment Income ...................... 321
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments sold ........................ (12,423)
Net realized loss on foreign currency transactions ........... (320)
Change in net unrealized appreciation/depreciation
of investments .............................................. 198,107
Change in net unrealized appreciation/depreciation
of foreign currency transactions ............................ (4)
---------
Net Realized and Unrealized Gain
on Investments and Foreign
Currency Transactions ...................... 185,360
------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .................. $ 185,681
============================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Global Retail Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE PERIOD
SEPTEMBER 29, 1994
(COMMENCEMENT OF
OPERATIONS) TO
AUGUST 31, 1995
------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment Income .............................................................................. $ 321
Net realized loss on investments sold and foreign currency transactions ............................ (12,743)
Change in net unrealized appreciation/depreciation of investments and foreign
currency transactions ........................................................................... 198,103
---------
Net Increase in Net Assets Resulting from Operations .............................................. 185,681
---------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.0133 per share) ..................................................................... (803)
Distributions in excess of net investment income
Class A - ($0.0140 per share) ..................................................................... (844)
---------
Total Distributions ............................................................................. (1,647)
---------
FROM FUND SHARE TRANSACTIONS -- NET* ................................................................. 27,566
---------
NET ASSETS:
Initial Investment by John Hancock Advisers, Inc. - Note A ......................................... 500,000
---------
End of period ...................................................................................... $ 711,600
=========
</TABLE>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 29, 1994
(COMMENCEMENT OF OPERATIONS)
TO AUGUST 31, 1995
----------------------------
SHARES AMOUNT
------ --------
<S> <C> <C>
CLASS A
Shares sold .................................................. 4,064 $ 36,313
Shares issued to shareholders in reinvestment of
distributions ............................................. 5 44
------- ---------
4,069 36,357
Less shares repurchased ...................................... (947) (8,791)
------- ---------
Net increase ................................................. 3,122 27,566
Initial Investment by John Hancock Advisers, Inc. - Note A ... 58,824 500,000
------- ---------
Net increase and shares outstanding end of period ............ 61,946 $ 527,566
======= =========
</TABLE>
The Statement of Changes in Net Assets shows how the value of the Fund's net
assets has changed since the commencement of operations. The difference reflects
earnings less expenses, any investment and foreign currency gains and losses,
distributions paid to shareholders and any increase or decrease in money
shareholders invested in the Fund. The footnote illustrates the number of Fund
shares sold, reinvested and redeemed during the period, along with the
corresponding dollar values.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Global Retail Fund
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are as
follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD SEPTEMBER 29, 1994
(COMMENCEMENT OF OPERATIONS)
TO AUGUST 31, 1995
---------------------------------
<S> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ............................................ $ 8.50(a)
------
Net Investment Income ........................................................... 0.01(b)
Net Realized and Unrealized Gain on Investments and Foreign
Currency Transactions 3.01
------
Total from Investment Operations ............................................... 3.02
------
Less Distributions:
Dividends from Net Investment Income ............................................ (0.01)
Distributions in excess of net investment income ................................ (0.02)
------
Total Distributions ............................................................ (0.03)
------
Net Asset Value, End of Period .................................................. $11.49
======
Total Investment Return at Net Asset Value ...................................... 35.61%(d)
Total Adjusted Investment Return at Net Asset Value (c)(e) ...................... 28.69%(d)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ....................................... $ 712
Ratio of Expenses to Average Net Assets ** ...................................... 1.50%*
Ratio of Adjusted Expenses to Average Net Assets (c) ............................ 9.00%*
Ratio of Net Investment Income to Average Net Assets ............................ 0.06%*
Ratio of Adjusted Net Investment Income to Average Net Assets (c) ............... (7.44%)*
Portfolio Turnover Rate ......................................................... 63%
** Expense Reimbursement Per Share .............................................. $ 0.65(b)
</TABLE>
* On an annualized basis.
(a) Initial price to commence operations.
(b) On average month end shares outstanding.
(c) On an unreimbursed basis without expense reduction.
(d) Not annualized.
(e) Unaudited.
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: NET INVESTMENT INCOME, GAINS (LOSSES),
DISTRIBUTIONS OF THE FUND AND TOTAL INVESTMENT RETURN OF THE FUND. IT SHOWS HOW
THE FUND'S NET ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE COMMENCEMENT OF
OPERATIONS. 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 Retail Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY GLOBAL
RETAIL FUND ON AUGUST 31, 1995. IT'S DIVIDED INTO TWO MAIN CATEGORIES: COMMON
STOCKS AND SHORT-TERM INVESTMENTS. THE COMMON STOCKS 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>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
<S> <C> <C>
COMMON STOCKS
COMPUTER - DEVICES (6.46%)
America Online, Inc.* ........................... 400 $ 26,300
HNC Software, Inc.* ............................. 300 7,350
Netscape Communications Corp.* .................. 250 12,344
--------
45,994
--------
CONSUMER PRODUCTS (5.66%)
Duracraft Corp.* ................................ 300 11,925
Fedders Corp. (Class A) ......................... 500 2,375
Fedders, Corp. .................................. 2,000 13,500
First Team Sports, Inc.* ........................ 600 12,450
--------
40,250
--------
FURNITURE (1.48%)
Industrie Natuzzi Spa, American
Depository Receipt, (ADR) (Italy) .............. 300 10,500
--------
HOTELS & MOTELS (1.90%)
La Quinta Inns, Inc. ............................ 450 13,500
--------
RETAIL - APPAREL/SHOE GROUP (12.97%)
Authentic Fitness Corp. ......................... 500 11,063
Giordano International Ltd.,
(Hong Kong) .................................... 20,000 16,406
Nine West Group, Inc.* .......................... 600 25,575
Oakley, Inc.* ................................... 700 22,487
Tommy Hilfiger Corp.* ........................... 500 16,750
--------
92,281
--------
RETAIL - BUILDING PRODUCTS (4.15%)
Castorama Dubois (France) ....................... 111 17,577
Home Depot, Inc. ................................ 300 11,962
--------
29,539
--------
RETAIL - COMPUTERS/ELECTRONICS (15.38%)
CDW Computer Centers, Inc.* ..................... 300 16,050
Circuit City Stores, Inc. ....................... 300 10,350
Elkjop Norge a. s. (Norway) ..................... 700 18,819
Global DirectMail Corp.* ........................ 800 22,000
Insight Enterprises, Inc.* ...................... 1,000 18,500
Micro Warehouse, Inc.* .......................... 500 23,750
--------
109,469
--------
RETAIL - DISCOUNT & VARIETY (5.46%)
Dollar General Corp. ............................ 300 7,875
Dollar Tree Stores, Inc.* ....................... 500 14,875
Warehouse Group Ltd. (The)
(New Zealand) .................................. 4,800 $ 16,077
--------
38,827
--------
RETAIL - DRUG STORES (3.61%)
Eckerd Corp.* ................................... 300 10,987
Walgreen Co. .................................... 600 14,700
--------
25,687
--------
RETAIL - FOOD & RESTAURANTS (4.15%)
Papa John's International, Inc.* ................ 300 11,850
Rock Bottom Restaurants, Inc.* .................. 700 17,675
--------
29,525
--------
RETAIL - MAIL ORDER/DIRECT (8.15%)
Amway Asia Pacific Ltd. ......................... 300 11,925
CUC International, Inc.* ........................ 450 15,356
Geerlings & Wade, Inc.* ......................... 500 5,250
Seattle Filmworks, Inc.* ........................ 1,200 25,500
--------
58,031
--------
RETAIL - MAJOR DEPARTMENT STORES (2.51%)
Next, PLC (United Kingdom) ...................... 3,000 17,903
--------
RETAIL - MISCELLANEOUS/DIVERSIFIED (19.43%)
Barnes & Noble, Inc.* ........................... 300 11,738
Borders Group, Inc.* ............................ 600 12,150
Cifra S.A. de CV (Series C) (Mexico) ............ 5,000 5,976
Daisytek International Corp.* .................. 1,000 23,250
Dayton Hudson Corp. ............................. 100 7,313
Moovies, Inc.* .................................. 700 12,775
OfficeMax, Inc.* ................................ 750 17,625
PetSmart, Inc.* ................................. 600 18,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
FINANCIAL STATEMENTS
John Hancock Funds - Global Retail Fund
<TABLE>
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
<S> <C> <C>
RETAIL - MISCELLANEOUS/DIVERSIFIED (CONTINUED)
PMT Services, Inc.* ............................. 500 $ 9,188
Regal Cinemas, Inc.* ............................ 600 20,250
--------
138,265
--------
RETAIL - SUPERMARKETS (7.36%)
Albertson's, Inc. ............................... 400 12,750
Carrefour Supermarche (France) .................. 40 22,331
Santa Isabel S.A., (ADR) (Chile)* ............... 800 17,300
--------
52,381
--------
TOTAL COMMON STOCKS
(Cost $ 504,045) (98.67%) $702,152
------ --------
</TABLE>
<TABLE>
<CAPTION>
INTEREST PAR VALUE
RATE (000'S OMITTED)
-------- ---------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT
JOINT REPURCHASE AGREEMENT (1.83%)
Investment in a joint repurchase agreement
transaction with UBS Securities, Inc. -
Dated 08-31-95, Due 09-01-95
(Secured by US Treasury Bill,
5.540% due 05-30-96; and US
Treasury Note, 5.625% due 01-31-98)
Note A ..................................... 5.80% 13 13,000
--------
TOTAL SHORT-TERM INVESTMENT
(Cost $13,000) (1.83)% 13,000
------- --------
TOTAL INVESTMENTS (100.50)% $715,152
======= ========
</TABLE>
* 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.
THE CONCENTRATION OF INVESTMENTS BY INDUSTRY GROUP FOR INDIVIDUAL SECURITIES
HELD BY THE FUND IS SHOWN IN THE SCHEDULE OF INVESTMENTS. IN ADDITION, THE
CONCENTRATION OF INVESTMENTS CAN BE AGGREGATED BY THE COUNTRIES IN WHICH THE
FUND INVESTS. THE TABLE BELOW SHOWS THE PERCENTAGES OF THE FUND'S INVESTMENTS AT
AUGUST 31, 1995 ASSIGNED TO THE VARIOUS COUNTRIES.
COUNTRY DIVERSIFICATION (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
OF FUND'S
COUNTRY DIVERSIFICATION NET ASSETS
- ----------------------- ---------------
<S> <C>
Chile ........................................................ 2.43%
France ....................................................... 5.61
Hong Kong .................................................... 2.31
Italy ........................................................ 1.48
Mexico ....................................................... 0.84
New Zealand .................................................. 2.26
Norway ....................................................... 2.64
United Kingdom ............................................... 2.52
United States ................................................ 80.41
------
TOTAL INVESTMENTS 100.50%
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Retail 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 Retail Fund (the "Fund", which
commenced operations on September 29, 1994), John Hancock Pacific Basin Equities
Fund and John Hancock Global Rx 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 and the Internal Revenue Service.
Shareholders of a class which bears distribution/service expenses under terms of
a distribution plan, have exclusive voting rights to such distribution plan.
There were no Class B shares outstanding during the period ended August 31,
1995. Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing sources
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 or
less 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 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.
Additionally, net capital losses of $12,423 attributable to security
transactions incurred after October 31, 1994 are treated as arising on the first
day (September 1, 1995) of the Fund's next taxable year.
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.
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.
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.
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
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Retail Fund
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.
There were no open foreign currency forward 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 option 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 will be limited
to the premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value will reflect the maximum exposure
of the Fund in these contracts, but the actual exposure will be 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 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.
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Retail Fund
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. In addition,
the Fund could be prevented from opening or realizing the benefits of closing
out futures positions because of position limits or limits on daily price
fluctuations imposed by an exchange.
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.
NOTE B --
MANAGEMENT FEE 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 $250,000,000 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 $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 Adviser has agreed to limit Fund expenses, including the management
fee (but not including the transfer agent fee and the 12b-1 fee), to 0.90% of
the Fund's daily net assets. Accordingly, the reduction in fees amounted to
$39,446 for the period ended August 31, 1995. The Adviser reserves the right to
terminate this limit in the future.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. For the period ended August
31, 1995, JH Funds received net sales charges of $1,287. Out of this amount,
$358 was retained and used for printing prospectuses, advertising, sales
literature and other purposes, and $929 was paid as sales commissions to
unrelated broker-dealers.
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 will make payments to JH Funds, for
distribution and service expenses at an annual rate not to exceed 0.30% of Class
A average daily net assets and 1.00% of Class B average daily net assets to
reimburse JH Funds for its distribution/service costs. Up to a maximum of 0.25%
of these 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
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Retail Fund
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. Effective January 1, 1995, the Fund pays transfer
agent fees based on the number of shareholder accounts and certain out-of-pocket
expenses. Prior to January 1, 1995, the Fund paid a monthly transfer agent fee
equivalent, on an annual basis, to 0.30% of the Fund's average daily net asset
value plus out of pocket expenses incurred by Investor Services on behalf of the
Fund for proxy mailings.
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 Adviser owns 58,824 shares of beneficial interest 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 with regard to 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 $793,489 and
$277,021, respectively.
The cost of investments owned at August 31, 1995 for federal income tax
purposes was $517,045. Gross unrealized appreciation and depreciation of
investments aggregated $209,750 and $11,643, respectively, resulting in net
unrealized appreciation of $198,107.
NOTE D --
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended August 31, 1995, the Fund has reclassified amounts to
reflect a decrease in capital paid-in of $1,646, a decrease in accumulated net
investment loss of $320 and an increase in accumulated net investment income of
$1,326. 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 certain differences in the computation of
distributable income and capital gains under federal tax rules versus generally
accepted accounting principles.
16
<PAGE> 17
John Hancock Funds - Global Retail Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock Global Retail 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 statement 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 Retail Fund
(the "Fund") (a portfolio of John Hancock World Fund) at August 31, 1995, and
the results of its operations, the changes in its net assets and financial
highlights for the period September 29, 1994 (commencement of operations)
through August 31, 1995, 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 audit. We conducted our audit 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 audit, which included
confirmation of securities at August 31, 1995 by correspondence with the
custodian and brokers, provides 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 for its fiscal year ended August 31,
1995.
With respect to the Fund's ordinary taxable income for the fiscal year
ended August 31, 1995, 100% of the dividends qualify for the corporate dividends
received deduction.
Shareholders will receive a 1995 U.S. Treasury Department Form 1099-DIV
in January of 1996. This will reflect the total of all distributions which are
taxable for the calendar year 1995.
17
<PAGE> 18
NOTES
John Hancock Funds - Global Retail Fund
18
<PAGE> 19
NOTES
John Hancock Funds - Global Retail Fund
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 Global
Retail 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 3000A 8/95
