Hancock Funds
Pacific
Basin
Equities
Fund
SEMI-Annual Report
February 29, 1996
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
Dennis S. Aronowitz*
Richard P. Chapman, Jr.*
William J. Cosgrove*
Gail D. Fosler*
Bayard Henry*
Anne C. Hodsdon
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
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 Frankln 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
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and
Chief Executive Officer, flush right, next to second paragraph.
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
The stock market's record-breaking, whirlwind performance in 1995 will
be a tough act to follow in 1996. In fact, we've already seen greater
market volatility this year, particularly among last year's leaders --
technology stocks. That's to be expected after a year that saw market
indexes soar, including the Standard & Poor's 500-Stock Index's 37%
advance. While many of the same economic conditions that fostered the
stellar 1995 market are still in place - slow economic growth, muted
inflation and decent corporate earnings - it would be unrealistic to
expect the market to stage a repeat in 1996. The old saying "trees don't
grow to the sky" comes to mind. Shareholders would do well to temper
expectations of investment returns and perhaps revisit their investment
allocations with their financial advisor to determine if rebalancing
their portfolio makes sense.
No matter how you scale back your market expectations, you should always
be able to count on consistent customer service performance. At John
Hancock Funds, we never stop working to find ways to sustain and improve
the quality of information and assistance we provide you. Our commitment
to this task is no less than John Hancock's loyalty was to his fledgling
country when he is said to have uttered, "if it does the public good,
burn Boston." We won't go that far, of course, but we share our
namesake's dedication to putting the public before all else.
In our case, that public is you, our shareholders. We take very
seriously the role you have entrusted to us, that of helping you achieve
your financial goals. Part of that will always involve good customer
service. So please do not hesitate to call your Customer Service
Representative at 1-800-225-5291 if you have any questions or need
information. We take pride in helping you with the same spirit that John
Hancock displayed at the dawning of America.
Sincerely,
/S/ EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
By Marian Li, David S. Beckwith and John L.F. Wills, Co-Portfolio Managers
John Hancock
Pacific Basin
Equities Fund
Asian markets begin to attract capital from
international investors; Hong Kong rally paces region
After more than two years of generally lackluster returns, Asian markets
have begun showing signs of life again, resulting in attractive returns
for John Hancock Pacific Basin Equities Fund. The shift first became
noticeable in late November 1995, when the U.S. stock market cooled off
long enough to start the flow of international investment capital back
into Japan and Southeast Asia. Since then, resurgent U.S. stocks have
slowed the process but haven't stopped it. Even while Asian stocks were
lagging, corporate earnings grew faster there than in Europe or the
United States, and the Asian economy expanded at a faster rate. That's
meant a continuing improvement in standard measures of valuation, such
as price-to-earnings ratio. Today, the P/E ratios of many Asian stocks
are extremely attractive both in historical terms and by comparison with
stocks in other regions of the world. In recent months, international
investors have begun to recognize that value, and stocks have risen
accordingly.
For the six months ended February 29, 1996, John Hancock Pacific Basin
Equities Fund Class A and Class B shares had total returns of 7.80% and
7.45% respectively, at net asset value. That was better than the 5.74%
average total return for all Pacific region funds, according to Lipper
Analytical Services. (1) Perhaps the biggest reason for the Fund's
above-average performances was its large stake in Hong Kong, which stood
at 18% of the Fund's total net assets by the end of February. The Hong
Kong market rose about 20% during the period. In the sections that
follow, we'll take a closer look at the Fund's performance in various
countries of the region.
"... Asian
markets
have begun showing
signs of
life again ..."
A 2" x 2" photo of Marian Li centered at bottom.
Caption reads: "Marian Li, Co- Portfolio Manager."
Japan
"... Perhaps
the biggest
reason for
the Fund's
above-
average
performance
was its
large stake
in Hong
Kong ..."
The Japanese economy has shown signs lately of emerging from a long and
difficult recession. Industrial production is picking up, buoyed in part
by the long-delayed rebuilding effort following the Kobe earthquake.
Moreover, the yen seems to have entered a cooling-off period, which
bodes well for exports. Throughout the Japanese economy, we see the
potential for significant earnings gains, and we've looked for companies
we think can deliver them. Examples include cyclical stocks such as
Mitsubishi Heavy Industry and Fanuc, an industrial robotics
manufacturer. There's also been some improvement in Japanese consumer
confidence, a trend we hope to capitalize on with investments in
consumer products manufacturers Matsushita Electric and Sony; and Jusco,
a retailer. At 25% of the Fund's total assets, our stake in Japan, while
significant, remains below a market weighting, because we believe many
of the most exciting opportunities in the region are elsewhere.
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 Jusco followed by an up arrow and the phrase "Japanese
retailer rose with consumer confidence." The second listing is HSBC
followed by an up arrow and the phrase "Hong Kong bank profited from
lower interest rates." The third listing is Jardine Matheson followed
by a down arrow and the phrase "Conglomerate delisted on Hong Kong
exchange." Footnote below reads: "See "Schedule of Investments.
"Investment holdings are subject to change."
Hong Kong
Banks have been the performance drivers lately in Hong Kong, boosted by
lower interest rates around the world and a thriving local real estate
market. Some of the Fund's long-time holdings that were top performers
during the past six months were real estate developers Wharf Holdings
and Cheung Kong Holdings; a bank, HSBC Holdings; and conglomerates Citic
Pacific and Swire Pacific, both with significant interests in China. The
Fund built up its stake in Hong Kong last summer, shortly before the
period began. Given the performance we've enjoyed, it may well be time
to begin trimming our holdings.
Singapore/Malaysia/Thailand
Taken as a group, these three emerging markets represent the largest
concentration of assets in the Fund, totaling more than 30%. All have
made solid progress in recent months toward achieving a better balance
between strong economic growth and a manageable inflation rate. That's
important not only because it bodes well for future earnings growth, but
also because it builds confidence in the region within the international
investment community and ultimately attracts capital. In Malaysia, one
of our favorite stocks is Resorts World, a casino operator with plans to
open a new hotel this year. In Singapore, our main holding is Keppel, a
conglomerate with interests in shipping, banking and property
development. In Thailand, we especially like Bangkok Bank, the largest
stock in the local index and a good way to bet on economic expansion in
the entire region.
A 2 1/2" x 2 3/4" photo of David S. Beckwith centered at bottom right.
Caption reads: "David S. Beckwith, Co-Portfolio Manager."
Fund performance
For the six months ended February 29, 1996
Bar chart entitled "Fund Performance" at top left hand column. A footnote
below states: "For the six months ended February 29, 1996." The chart is
scaled in increments of 1% from bottom to top, with 8% at top and 0% at
bottom. Within the chart are three solid bars. The first represents the
7.80% total return for John Hancock Pacific Basin Equities Fund: Class A.
The second represents the 7.45% total return for John Hancock Pacific Basin
Equities Fund: Class B. The third represents the 5.74% total return for the
average Pacific Region Fund. The footnote below states "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."
Australia/New Zealand
We've sold a lot of Australian stocks lately, mainly to make room in the
Fund for better opportunities in smaller Asian markets. Our focus in
this part of the world remains on natural-resource stocks, such as
Broken Hill Proprietary, an Australian lumber and mining company. In
trimming our Australian position, we sold on strength News Corp., the
media conglomerate which profited from the recent wave of mergers and
acquisitions in the industry. In New Zealand, our only remaining holding
is Telecom Corp. of New Zealand.
"... the
regional
economy in Asia is
growing
faster than anywhere
else in
the world ..."
Outlook
For several years now, we've been repeating the news that the regional
economy in Asia is growing faster than anywhere else in the world and
that many companies continue to report strong earnings growth. As growth
slows in the United States and Europe, those trends are likely to
accelerate. What's been lacking, until recently, is any real evidence
that these promising long-term trends were translating into higher stock
prices. Our hope is that the improvement we've seen during the past six
months proves to be the beginning of a recovery throughout the region.
A 2 1/2" x 2 1/2" photo of John L.F. Wills is centered at bottom right.
Caption reads: "John L.F. Wills, Co-Portfolio Manager."
This commentary reflects the views of the portfolio management team
through the end of the Fund's period discussed in this report. Of
course, the team's views are subject to change as market and other
conditions warrant. International investing involves special risks,
including currency and political risks and differences in accounting
standards and financial reporting.
(1) Figures from Lipper Analytical Services include reinvested dividends
and do not take into account sales charges. Actual load-adjusted
performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock 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 net asset value per share.
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.
CUMULATIVE TOTAL RETURNS
For the period ended December 31, 1995
One Five Life of
Year Years Fund
---- ----- -----
John Hancock Pacific Basin
Equities Fund: Class A (0.29%) 77.23% 81.44%(1)
John Hancock Pacific Basin
Equities Fund: Class B (0.81%) (4.69%)(2) N/A
AVERAGE ANNUAL TOTAL RETURNS
For the period ended December 31, 1995
One Five Life of
Year Years Fund
---- ----- -----
John Hancock Pacific Basin
Equities Fund: Class A (0.29%) 12.13% 7.43%(1)
John Hancock Pacific Basin
Equities Fund: Class B (0.81%) (2.59%)(2) N/A
Notes to Performance
(1)Class A shares started on September 8, 1987.
(2)Class B shares started on March 7, 1994.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in John
Hancock Pacific Basin Equities Fund would be worth on February 29, 1996,
assuming you invested on the day each class of shares started and have
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.
Pacific Basin Equities Fund
Class A shares
Line chart with the heading 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 Pacific Basin Equities Fund on September 8, 1987,
before sales charge, and is equal to $19,877 as of February 29, 1996.
The second line represents the Pacific Basin Equities Fund after sales
charge and is equal to $18,877 as of February 29, 1996. The third
line represents the value of the Morgan Stanley Capital International
Pacific Index and is equal to $11,929 as of February 29, 1996.
Pacific Basin Equities Fund
Class B shares
Line chart with the heading 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 hypothetical $10,000
investment made in the Pacific Basin Equities Fund on March 7, 1994,
before contingent deferred sales charge, and is equal to $10,320
as of February 29, 1996. The second line represents the value of
the Morgan Stanley Capital International Pacific Index and is equal
to $10,074 as of February 29, 1996. The third line represents the
Pacific Basin Equities Fund after contingent deferred sales charge
and is equal to $9,920 as of February 29, 1996.
<TABLE>
<CAPTION>
John Hancock Funds - Pacific Basin Equities 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 February
29, 1996. You'll also find the net asset value and the maximum
offering price per share as of that date.
Statement of Assets and Liabilities
February 29, 1996 (Unaudited)
- ---------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks and rights (cost - $62,377,369) $69,673,839
Joint repurchase agreement (cost - $1,802,000) 1,802,000
-----------
71,475,839
Cash 2,039
Foreign currency, at value (cost - $1,859,839) 1,859,735
Receivable for shares sold 703,283
Receivable for investments sold 139,165
Dividends receivable 93,033
Other assets 1,849
-----------
Total Assets 74,274,943
- ---------------------------------------------------------------------
Liabilities:
Payable for shares repurchased 4,023
Payable for investments purchased 324,753
Foreign taxes payable 206,148
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 129,955
Accounts payable and accrued expenses 159,857
-----------
Total Liabilities 824,736
- ---------------------------------------------------------------------
Net Assets:
Capital paid-in 68,149,342
Accumulated net realized loss on investments
and foreign currency transactions ($1,643,801)
Net unrealized appreciation of investments
and foreign currency transactions 7,102,809
Accumulated net investment loss ($158,143)
-----------
Net Assets $73,450,207
=====================================================================
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 - $43,051,068/2,829,926 $15.21
- ---------------------------------------------------------------------
Class B - $30,399,139/2,026,664 $15.00
- ---------------------------------------------------------------------
Maximum Offering Price Per Share *
Class A - ($15.21 x 105.26%) $16.01
=====================================================================
* 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.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows
net gains (losses) for the period stated.
Statement of Operations
Six months ended February 29, 1996 (Unaudited)
- -------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding taxes of $29,819) $447,660
Interest 66,440
---------
514,100
---------
Expenses:
Investment management fee - Note B 228,553
Distribution/service fee - Note B
Class A 58,231
Class B 91,588
Transfer agent fee - Note B 127,354
Custodian fee 61,648
Legal fees 45,017
Registration and filing fees 32,606
Auditing fee 15,664
Printing 7,542
Trustees' fees 2,714
Miscellaneous 1,326
---------
Total Expenses 672,243
- -------------------------------------------------------------------
Net Investment Loss ($158,143)
- -------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized loss on investments sold ($748,600)
Net realized loss on foreign currency transactions ($210,213)
Change in net unrealized appreciation/depreciation
of investments 5,603,359
Change in net unrealized appreciation/depreciation
of foreign currency transactions ($6,726)
---------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions 4,637,820
- -------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 4,479,677
===================================================================
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31,
(UNAUDITED) 1995
----------- ----------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($158,143) ($26,724)
Net realized loss on investments sold and
foreign currency transactions (958,813) (808,993)
Change in net unrealized appreciation/depreciation of
investments and foreign currency transactions 5,596,633 (3,796,418)
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from Operations 4,479,677 (4,632,135)
----------- -----------
Distributions to shareholders:
Distributions from net realized gain on investments sold and foreign
currency transactions
Class A - (none and $0.5482 per share, respectively) -- (1,615,390)
Class B - (none and $0.5482 per share, respectively) -- (485,450)
----------- -----------
Total Distributions to Shareholders -- (2,100,840)
----------- -----------
From Fund Share Transactions - Net* 17,185,641 (1,223,114)
----------- -----------
Net Assets:
Beginning of period 51,784,889 59,740,978
----------- -----------
End of period (including accumulated net investment loss
of $158,143 and none, respectively) $73,450,207 $51,784,889
=========== ===========
<CAPTION>
* Analysis of Fund Share Transactions: SIX MONTHS ENDED
FEBRUARY 29, 1996 YEAR ENDED
(UNAUDITED) AUGUST 31, 1995
--------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold 2,737,514 $40,116,535 1,831,046 $25,781,273
Shares issued to shareholders in reinvestment of distributions -- -- 112,000 1,558,965
--------- ---------- --------- ----------
2,737,514 40,116,535 1,943,046 27,340,238
Less shares repurchased (2,559,543) (37,696,885) (2,455,590) (34,756,404)
--------- ---------- --------- ----------
Net increase (decrease) 177,971 $2,419,650 (512,544) ($7,416,166)
========= ========== ========= ==========
Class B
Shares sold 1,911,928 $27,894,118 1,880,511 $26,138,987
Shares issued to shareholders in reinvestment of distributions -- -- 31,341 434,079
--------- ---------- --------- ----------
1,911,928 27,894,118 1,911,852 26,573,066
Less shares repurchased (914,393) (13,128,127) (1,481,266) (20,380,014)
--------- ---------- --------- ----------
Net increase 997,535 $14,765,991 430,586 $6,193,052
========= ========== ========= ==========
The Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous
period. The difference reflects earnings less expenses, any investment and foreign currency gains and losses, distributions
paid to shareholders, 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 last two periods, along with the corresponding dollar values.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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:
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 1996 --------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $14.11 $15.88 $13.27 $8.87 $9.05 $10.34
------ ------ ------ ------ ------ ------
Net Investment Income (Loss) (0.02)(a) 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 1.12 (1.24) 3.12 4.51 (0.11) (0.33)
------ ------ ------ ------ ------ ------
Total from Investment Operations 1.10 (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 $15.21 $14.11 $15.88 $13.27 $8.87 $9.05
====== ====== ====== ====== ====== ======
Total Investment Return at Net
Asset Value (c) 7.80%(f) (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) $43,051 $37,417 $50,261 $14,568 $3,222 $4,065
Ratio of Expenses to Average Net Assets 2.12%* 2.05% 2.43% 2.94% 2.73% 2.75%
Ratio of Adjusted Expenses to Average
Net Assets (g) -- -- -- 4.24% 6.31% 5.79%
Ratio of Net Investment Income (Loss) to
Average Net Assets (0.30%)* 0.13%(d) (0.66%) (0.98%) (0.82%) (0.06%)
Ratio of Adjusted Net Investment Loss to
Average Net Assets (g) -- -- -- (2.28%) (4.40%) (3.10%)
Portfolio Turnover Rate 26% 48% 68% 171% 179% 151%
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.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
- -----------------------------------------------------------------------------------------------------
PERIOD
SIX MONTHS ENDED YEAR ENDED ENDED
FEBRUARY 29, 1996 AUGUST 31, AUGUST 31,
( UNAUDITED) 1995 1994
--------------------------------------------
<S> <C> <C> <C>
CLASS B(h)
Per Share Operating Performance
Net Asset Value, Beginning of Period $13.96 $15.84 $15.11(b)
------ ------ ------
Net Investment Loss (0.08)(a) (0.09)(a) ( 0.09)(a)
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions 1.12 (1.24) 0.82
------ ------ ------
Total from Investment Operations 1.04 (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 $15.00 $13.96 $15.84
====== ====== ======
Total Investment Return at Net Asset Value (c) 7.45%(f) (8.38%) 4.83%(f)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $30,399 $14,368 $9,480
Ratio of Expenses to Average Net Assets 2.84%* 2.77% 3.00%*
Ratio of Net Investment Loss to Average Net Assets (1.09%)* (0.66%) (1.40%)*
Portfolio Turnover Rate 26% 48% 68%
* On an annualized basis.
(a) On average month end shares outstanding.
(b) Initial price at commencement of operations.
(c) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(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) An estimated total return calculation which takes into consideration fees and expenses waived
or borne by the Adviser during the periods shown.
(f) Not annualized.
(g) On an unreimbursed basis without expense reduction.
(h) Class B shares commenced operations on March 7, 1994.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
February 29, 1996 (Unaudited)
- ---------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Pacific Basin Equities Fund on February 29, 1996. It's divided into three main
categories: common stocks, rights 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.
- ---------------------------------------------------------------------------------
NUMBER OF MARKET
ISSUER,DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
Australia (5.99%)
Amcor Ltd. (Paper) 140,000 $1,016,742
Broken Hill Proprietary Co., Ltd.
(Diversified Operations) 80,000 1,158,933
National Australia Bank Ltd. (Banks) 110,000 1,055,347
Woolworth's Ltd. (Retail) 451,000 1,168,787
-----------
4,399,809
-----------
Hong Kong (18.22%)
Bank of East Asia, Ltd. (Banks) 240,000 853,717
Cheung Kong (Holdings) Ltd.
(Real Estate) 150,000 1,042,893
China Light & Power Co., Ltd. (Utilities) 140,000 655,551
CITIC Pacific Ltd. (Diversified Operations) 400,000 1,557,387
Consolidated Electric Power Asia Ltd.
(Utilities) 350,000 645,138
Harbin Power Equipment Co., Ltd.
(Machinery) 590,000 117,528
HSBC Holdings Ltd. (Banks) 170,800 2,739,552
Hutchison Whampoa Ltd,
(Diversified Operations) 200,000 1,267,640
Hysan Development Co., Ltd.
(Real Estate) 220,000 638,865
M.C. Packaging Ltd. (Containers) 890,000 333,855
Sun Hung Kai Properties Ltd.
(Real Estate) 180,000 1,606,540
Swire Pacific Ltd. (A Shares)
(Diversified Operations) 145,000 1,266,023
Wharf Holdings Ltd. (Real Estate) 170,000 658,591
-----------
13,383,280
-----------
Indonesia (2.40%)
PT Bank International Indonesia (Banks) 239,800 1,011,891
PT Indonesian Satellite., American
Depositary Receipts (ADR)
(Telecommunications) 20,000 747,500
-----------
1,759,391
-----------
Japan (25.28%)
Canon Inc. (Office Equipment
& Supplies) 66,000 1,212,046
Fanuc Ltd. (Machinery) 18,000 781,008
Itochu Corp. (Diversified Operations) 200,000 1,339,740
Jusco Co., Ltd. (Retail) 63,000 1,582,568
Kawasaki Steel Corp. (Steel) 222,000 752,005
Marui Co., Ltd. (Retail) 69,000 1,326,229
Matsushita Electric Industrial Co., Ltd.
(Electronics) 60,000 959,132
Minebea Co., Ltd. (Machinery) 100,000 865,883
Mitsubishi Heavy Industries, Ltd.
(Machinery) 90,000 728,769
Mitsui Home Co., Ltd. (Construction) 35,000 556,163
Nippon Paper Industries Co., Ltd. (Paper) 104,000 747,134
NTT Data Communications Systems Co.
(Computers) 52 1,533,850
Rohm Co., Ltd. (Electronics) 20,000 1,189,400
Sanwa Bank Ltd. (Banks) 39,000 716,209
Sharp Corp. ( Electronics) 77,000 1,201,580
Sony Corp. ( Electronics) 11,500 674,057
Sumitomo Trust & Banking Co., Ltd.
(The) (Banks) 110,000 1,371,140
Toshiba Corp. (Electronics) 133,000 1,028,869
-----------
18,565,782
-----------
Korea (4.69%)
Korea Electric Power Corp. (Utilities) 22,000 801,227
Korea Electric Power Corp. (ADR)
(Utilities) 30,000 727,500
Korea Line Co. (Transportation)* 378 7,052
Korea Long-Term Credit Bank (Banks)* 19,700 541,243
Pohang Iron & Steel Co., Ltd. (Steel) 9,000 598,045
Samsung Electronics Co. (Electronics)* 4,657 767,686
-----------
3,442,753
-----------
Malaysia (10.67%)
DCB Holdings Berhad (Banks) 360,000 1,094,848
Land & General Berhad (Real Estate) 450,000 1,006,553
Petronas Gas Berhad (Oil & Gas) 200,000 776,989
Renong Berhad (Diversified Operations) 438,000 697,830
Resorts World Berhad (Leisure &
Recreation) 250,000 1,402,896
Sime Darby Berhad (Diversified Operations) 400,000 $1,075,227
Tenaga Nasional Berhad (Utilities) 170,000 687,125
United Engineers Ltd. (Construction) 170,000 1,094,063
-----------
7,835,531
-----------
New Zealand (1.51%)
Telecom Corporation of New Zealand
(Telecommunications) 248,000 1,111,793
-----------
Philippines (3.18%)
Manila Electric Co. (B Shares) (Utilities) 71,800 667,077
Philippine Long Distance Telephone
(ADR) (Telecommunications) 12,500 739,062
Pilipino Telephone Corp.
(Telecommunications)* 800,000 932,900
-----------
2,339,039
-----------
Singapore (11.87%)
Fraser & Neave Ltd. (Beverages) 100,000 1,338,527
Hongkong Land Holdings Ltd.
(Real Estate) 430,000 933,100
Jardine Matheson Holdings Ltd.
(Diversified Operations) 130,000 1,040,000
Keppel Corp. Ltd. (Diversified Operations) 160,000 1,620,397
Oversea-Chinese Banking Corp, (Banks) 85,000 1,179,887
Singapore Airlines Ltd. (Transportation) 100,000 1,005,666
United Overseas Bank Ltd. (Banks) 150,000 1,604,108
-----------
8,721,685
-----------
Thailand (11.05%)
Bangkok Bank (Banks) 125,000 1,626,339
Electricity Generating Public Co., Ltd.
(Utilities)* 200,000 793,336
Finance One Public Co., Ltd. (Finance) 89,500 656,783
Italian-Thai Development Public Co., Ltd.
(Construction) 64,000 675,288
Land & House Public Co., Ltd.
(Real Estate) 53,000 1,051,170
National Finance and Securities Co., Ltd.
(Finance) 150,000 1,011,503
Shinawatra Computer and Communication
Public Co., Ltd. (Telecommunications) 32,000 832,685
Siam Cement Co Public Co., Ltd. (The)
(Building Products) 12,500 650,536
Siam Commercial Bank Public Co., Ltd.
(Banks) 50,000 817,136
-----------
8,114,776
-----------
TOTAL COMMON STOCKS
(Cost $62,377,369) (94.86%) 69,673,839
----- -----------
RIGHTS
Malaysia (00.00%)
Renong Berhad (Diversified Operations)* 87,600 $0
-----------
TOTAL RIGHTS
(Cost $0) 0.00% 0
-----------
TOTAL COMMON STOCKS AND RIGHTS
(Cost $62,377,369) (94.86%) 69,673,839
----- -----------
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (OOO'S OMITTED) VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (2.45%)
Investment in a joint repurchase
agreement transaction with
BT Securities Corp. -Dated
02-29-96, Due 03-01-96
(secured by U.S. Treasury Bond,
12.50% Due 08-15-14 and by
U.S. Treasury Note, 8.50%
Due 04-15-97) Note A 5.43% $1,802 1,802,000
TOTAL SHORT-TERM INVESTMENTS
(Cost $1,802,000) (2.45%) 1,802,000
----- ----------
TOTAL INVESTMENTS (97.31%) $71,475,839
===== ==========
*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.
See notes to financial statements.
</TABLE>
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 February 29, 1996
assigned to the various investment categories.
- -----------------------------------------------------------------
MARKET VALUE OF
SECURITIES AS A
INVESTMENT CATEGORIES % OF NET ASSETS
- --------------------- ---------------
Banks 19.89%
Beverages 1.82
Building Products 0.89
Computers 2.09
Construction 3.17
Containers 0.45
Diversified Operations 15.01
Electronics 7.92
Finance 2.27
Leisure & Recreation 1.91
Machinery 3.39
Office Equipment & Supplies 1.65
Oil & Gas 1.06
Paper 2.40
Real Estate 9.45
Retail 5.55
Steel 1.84
Telecommunications 5.94
Transportation 1.38
Utilities 6.78
Short-Term Investments 2.45
-------
TOTAL INVESTMENTS 97.31%
=======
See notes to financial statements.
Notes to Financial Statements
John Hancock Funds - Pacific Basin Equities Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock World Fund (the "Trust") is an open-end management
investmentcompany, 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 Marketplace Fund. Prior to December 11, 1995, John Hancock
Global Marketplace Fund was known as John Hancock Global Retail Fund.
The Fund's investment objective is to achieve long-term capital
appreciation through investment in a diversified portfolio of equity
securities of issuers located in countries of the Pacific Basin.
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.
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 of its taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, net currency exchange gains and
losses from sales of foreign debt securities must be treated as ordinary income
even though such items are gains and losses for accounting purposes. For federal
income tax purposes, the Fund has $586,066 of capital loss carryforward
available, to the extent provided by regulations, to offset future net realized
capital gains. To the extent such carryforward is used by the Fund, no capital
gains distribution will be made. The carryforward expires August 31, 2003.
Additionally, net capital losses of $67,979 attributable to security
transactions occurring after October 31, 1994 are treated as arising on the
first day (September 1, 1995) of the Fund's current 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. Foreign income
may be subject to foreign withholding taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net investment income
and realized gains on the ex-dividend date. Such distributions are determined in
conformity with income tax regulations, which may differ from generally accepted
accounting principals. Dividends paid by the Fund with respect to each class of
shares will be calculated in the same manner, at the same time and will be in
the same amount, except for the effect of expenses that may be applied
differently to each class as explained previously.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund. Expenses which are not 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.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities, revenues,
and expenses of the Fund.
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.
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 February 29, 1996, there were no open forward foreign currency exchange
contracts.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on securities
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 (the "Sub-Adviser"), a wholly-owned subsidiary of the Adviser, under
which the Sub-Adviser, subject to the review of the Trustees and overall
supervision of the Adviser, provides the Fund with investment management
services and advice with respect to 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 will serve 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 the Sub-Adviser 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, the Sub-Adviser 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) 40% percent 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).
On 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. For the period ended February
29, 1996, net sales charges received with regard to sales of Class A shares
amounted to $187,453. Out of this amount, $26,249 was retained and used for
printing prospectuses, advertising, sales literature and other purposes, $30,648
was paid as sales commissions to unrelated broker-dealers and $130,556 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 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 February 29, 1996, contingent
deferred sales charges paid to JH Funds amounted to $32,782.
In addition, to compensate JH Funds for the services it provides as distributors
of shares of the Fund, the Fund has adopted a Distribution Plan 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.
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 October 1, 1995, the Fund paid transfer agent fees as
a class specific expense based on the number of shareholder accounts and certain
out-of-pocket expenses. For the one month ended September 30, 1995 the transfer
agent expense, calculated as a class specific expense, was $11,509 for Class A
and $5,450 for Class B, respectively. Effective October 1, 1995, transfer agent
expense is a fund expense.
On March 26, 1996, the Board of Trustees approved, retroactively to January 1,
1996, an agreement with the Adviser to perform necessary tax and financial
management services for the Fund.
Messrs. Edward J. Boudreau, Jr., Richard S. Scipione and Ms. Anne C. Hodsdon are
directors and/or officers of the Adviser and/or its affiliates, as well as
Trustees of the Fund. The Adviser owns 10,000 Class A shares of beneficial
interest of the Fund. Trustee Edward J. Boudreau, Jr. is Managing Director of
the Sub-Adviser. 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 makes investments into other
John Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation liability
are recorded on the Fund's books as an other asset. The deferred compensation
liability and the related other asset are always equal and are marked to market
on a periodic basis to reflect any income earned by the investment as well as
any unrealized gains or losses.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended February 29, 1996 aggregated $29,934,133 and
$14,120,717, respectively. There were no purchases or sales of obligations of
the U.S. government and its agencies during the period ended February 29, 1996.
The cost of investments owned at February 29, 1996 (including the joint
repurchase agreement) for federal income tax purposes was $64,210,311. Gross
unrealized appreciation and depreciation of investments aggregated $8,618,819
and $1,353,291, respectively, resulting in net unrealized appreciation of
$7,265,528.
Notes
John Hancock Funds - Pacific Basin Equities Fund
A 1/2" by 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."
John Hancock Funds
A Global Investment Management Firm
101 Huntington Avenue, Boston, MA 02199-7603
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 582
A recycled logo in lower left hand corner with the caption "
Printed on Recycled Paper."
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.
Printed on Recycled Paper JHD 580SA 2/96
4/96
John Hancock Funds
Global
Marketplace
Fund
SEMI-ANNUAL REPORT
February 29, 1996
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
Dennis S. Aronowitz*
Richard P. Chapman, Jr.*
William J. Cosgrove*
Gail D. Fosler*
Bayard Henry*
Anne C. Hodsdon
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
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 Frankln 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
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
The stock market's record-breaking, whirlwind performance in 1995 will
be a tough act to follow in 1996. In fact, we've already seen greater
market volatility this year, particularly among last year's leaders --
technology stocks. That's to be expected after a year that saw market
indexes soar, including the Standard & Poor's 500-Stock Index's 37%
advance. While many of the same economic conditions that fostered the
stellar 1995 market are still in place - slow economic growth, muted
inflation and decent corporate earnings - it would be unrealistic to
expect the market to stage a repeat in 1996. The old saying "trees don't
grow to the sky" comes to mind. Shareholders would do well to temper
expectations of investment returns and perhaps revisit their investment
allocations with their financial advisor to determine if rebalancing
their portfolio makes sense.
No matter how you scale back your market expectations, you should always
be able to count on consistent customer service performance. At John
Hancock Funds, we never stop working to find ways to sustain and improve
the quality of information and assistance we provide you. Our commitment
to this task is no less than John Hancock's loyalty was to his fledgling
country when he is said to have uttered, "if it does the public good,
burn Boston." We won't go that far, of course, but we share our
namesake's dedication to putting the public before all else.
In our case, that public is you, our shareholders. We take very
seriously the role you have entrusted to us, that of helping you achieve
your financial goals. Part of that will always involve good customer
service. So please do not hesitate to call your Customer Service
Representative at 1-800-225-5291 if you have any questions or need
information. We take pride in helping you with the same spirit that John
Hancock displayed at the dawning of America.
Sincerely,
/S/ EDWARD J. BOUDREAU, JR.,
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
By Bernice S. Behar, CFA, Portfolio Manager
John Hancock
Global
Marketplace Fund
Focus on retailers with innovative or
unique characteristics boosts performance
Even as most stock market barometers reached new highs, many apparel
makers, department stores and chains suffered as consumers tightened
their purse strings in response to continued corporate downsizing,
stagnant wages and rising personal debt. What's more, a general
overbuilding of stores meant that a growing number of these
"traditional" retailers were forced to compete for an ever-shrinking
pie. More recently, competition from other sources -- including direct
marketers and on-line services -- has challenged the strong hold that
most retailers have held for the last several decades.
But that's not to say that there wasn't money to be made with companies
that sell consumer goods and services. For the six months ended February
29, 1996 the Fund's Class A shares posted a total return of 17.84% at
net asset value. The Fund's Class B shares, which began on January 22,
1996, had a total return of 13.22%, at net asset value through February
29, 1996. By comparison, the Standard & Poor's Retail Index returned
2.04% and the average global fund returned 7.44% for the same period,
according to Lipper Analytical Services.(1)
The Fund seeks to take advantage of changes that have occurred in the
retail industry as consumers have become more cost-conscious, selective
and demanding about the goods and sevices they buy. This has given birth
to a new breed of retailer that is meeting the challenges by having
characteristics such as an innovative distribution channel, a unique
product, service or competitive advantage and a leader in innovative
marketing or sales methods.
"The key to
the Fund's
success is
a focus on
companies
that offer
special
characteristics
..."
A 2 1/4" x 2 3/4" photo Bernice S. Behar centered at bottom right.
Caption reads: "Bernice S. Behar, Portfolio Manager."
Chart with heading " Top Five Common Stock Holdings" at top left hand
column. "The chart lists five holdings: Dixons Group 2.9%; Joyce Boutique
2.7%; Giordano International 2.6%; Papa John's International 2.5%; Seattle
Filmworks 2.5%. The footnote below states: "As a percentage of net assets
on February 29, 1996."
Top Five Common
Stock Holdings
1. Dixons Group 2.9%
2. Joyce Boutique 2.7%
3. Giordano International 2.6%
4. Papa John's International 2.5%
5. Seattle Filmworks 2.5%
As a percentage of net assets on February 29, 1996
"...roughly one-third of the Fund's investments
were in overseas companies."
Select performers
Here are a few examples of the Fund's investments that have performed
well during the period:
REGAL CINEMAS: Regal theaters have a competitive advantage because they
get exclusive rights to screen first-run movies in their respective
areas, which affords this chain's cinemas the ability to operate under
near-monopoly conditions. Regal has successfully enhanced its revenues
by adding screens and adjacent entertainment centers which include video
games and rides.
CARREFOUR: A pioneer of the "hyper market" concept which combines
general merchandise and grocery shopping, this French company has met
with great success as it expands throughout Latin America and Asia.
PAPA JOHN'S INTERNATIONAL: This chain of high-quality pizza restaurants
enjoyed increasing revenues by adding new stores. Using its proprietary,
regionalized commissaries to supply it with ingredients has helped boost
the company's profits.
Table entitled "Scorecard" at bottom left hand column. The header for
the left hand column is "Investment"; the header for the right hand
column is "Recent performance...and what's behind the numbers." The
first listing is Dixons followed by an up arrow and the phrase"
Growing PC demand boosts sales." The second listing is Authentic
Fitness followed by an up arrow and the phrase "Strong brand
franchise with Speedo, White Stag." The third listing is Grand
Optical Photo followed by a flat arrow and the phrase "1-hour
optical/photo still gaining acceptance in France." A footnote
below states " See "Schedule of Investments." Investment holdings
are subject to change."
Scorecard
INVESTMENT RECENT PERFORMANCE . . . AND WHAT'S BEHIND THE NUMBERS
Dixons Group Growing PC demand boosts sales
Authentic Fitness Strong brand franchise with Speedo, White Stag
Grand Optical 1-hour optical/photo still gaining acceptance in
France
See "Schedule of Investments." Investment holdings are subject to change.
PETSMART: The leading pet supply superstore chain, PetSmart distributes
unique products and services and has successfully wrangled consumer
spending away from more traditional retailers like supermarkets. It
offers everything from the basics, like pet food, to grooming and
veterinary services.
Despite weak apparel sales, we were still able to find attractive
opportunities in this sector. One example is Authentic Fitness, a
leading manufacturer of sports-oriented apparel, including the Speedo
and White Stag brands. Much of its revenue comes from selling swimsuits
to swim teams, a business which tends to repeat itself and helped
insulate it from declining consumer spending. Another was Tommy
Hilfiger, the maker of boys' and men's apparel which has successfully
taken advantage of the trend toward casual business attire. Its stock
has been a strong performer for the Fund.
International opportunities
At the end of the period, roughly one-third of the Fund's investments
were in overseas companies. Among them are two Hong Kong-based apparel
retailers. Giordano International is a Gap-like chain which offers
attractive, mid-priced clothing. We believe the chain can benefit from
the rise in the middle class Asian population and the resulting increase
in discretionary income. Joyce Boutique offers higher-end clothing and
we believe it, too, will continue to benefit from the rise in consumer
spending in Hong Kong.
Another apparel retailer we liked was Gucci Group. This Italian
company's name carries a lot of cachet, but unfortunately it languished
in recent years because it hasn't been able to successfully leverage
that cachet. More recently, the company's profits have improved through
beefed up marketing.
Bar chart entitled "Fund Performance" at top left hand column. The
footnote below states: "For Class A shares and the average global fund,
return is for the six months ended February 29, 1996. For Class B Shares,
return is from January 23, 1996 through February 29, 1996." The chart
is scaled in increments of 2 % from bottom to top; with 18% at the top
and 0% at the bottom. Within the chart are three solid bars. The first
represents the 17.84% total return for John Hancock Global Marketplace
Fund: Class A. The second represents the 13.22% total return for John
Hancock Global Marketplace Fund: Class B. The third represents the 7.44%
total return for the average Global Fund. A footnote below states: "The
total returns for John Hancock Global Marketplace Fund are at net asset
value with all distributions reinvested. The average global fund is
tracked by Lipper Analytical Services. (1) See following page for
historical performance information."
Fund performance
For Class A shares and the average global fund, return is for the six
months ended February 29, 1996
For Class B shares, return is from January 22, 1996 through February 29,
1996
The total returns for John Hancock Global Marketplace Fund are at net
asset value with all distributions reinvested. The average global fund
is tracked by Lipper Analytical Services.(1) See following page for
historical performance information. See the following page for historical
performance information.
The United States has more sophisticated merchandising and more unique
retail concepts than most other parts of the world. In many cases, our
international holdings reflect overseas companies who have identified
trends that have worked well in the United States, and adapted them in
their own countries. The French company Grand Optical Photoservices
recently adopted the one-hour photo and one- hour optical concepts in
France. While we expect this trend to catch on with the French, the
stock price hadn't moved up much during the period.
Home Centers Ltd., an Israeli version of Home Depot, is expected to
launch its do-it-yourself home improvement stores throughout the Middle
East. Dixons, a U.K.-based computer chain similar to CompUSA, continues
to benefit from growing demand for personal computers in that region.
The number of people who own PCs in the United Kingdom is about
one-third of that of the United States, a gap which we expect should
narrow.
Outlook
With consumer debt high, economic growth slow, and wage growth at a
standstill, the retail environment could remain difficult for some time.
Retail sales are not expected to grow much this year or in the
foreseeable future. What's more the retail industry will be forced to
reckon with a glut of retail space. U.S. retail space per capita has
doubled in the past 20 years, a growth rate which exceeds by a wide
margin any other country in the world. It's likely that we'll see some
consolidations among retail players or some store closings.
That said, we believe the global marketplace's shelves are still lined
with interesting opportunities. The key to finding them will be to keep
our definition of retailers broad and stick to our investment strategy
of focusing on companies that differentiate themselves by offering
something unique -- be it the use of a new distribution channel,
superior or new products or services, or other advantages. In our view,
those are the companies that will provide the best returns over time.
"... the global
marketplace's
shelves
are still
lined with
interesting
opportunities"
This commentary reflects the views of the portfolio manager through the
end of the Fund's period discussed in this report. Of course, the
manager's views are subject to change as market and other conditions
warrant.
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.
(1) Figures from Lipper Analytical Services include reinvested
dividends and do not take into account sales charges. Actual
load-adjusted performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Global Marketplace
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 net asset value per share.
Performance figures include the maximum applicable sales charge of 5%
for Class A shares. 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.
CUMULATIVE TOTAL RETURNS
For the period ended December 31, 1995
One Life of
Year Fund (1)
----------------------------
John Hancock Global Marketplace
Fund:Class A(2) 32.97% 36.08%
AVERAGE ANNUAL TOTAL RETURNS
For the period ended December 31, 1995
One Life of
Year Fund (1)
----------------------------
John Hancock Global Marketplace
Fund: Class A(2) 32.97% 27.95%
Notes to Performance
(1)Operations commenced on September 29, 1994.
(2)Effective September 29, 1994, the Adviser has voluntarily
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 limitations
of expenses, the average annual total return for the one-year period
and since inception would have been 25.47% and 20.45%, respectively.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in John
Hancock Global Marketplace Fund would be worth on February 29, 1996,
assuming you invested on the day each class of shares started and have
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.
Global Marketplace Fund
Class A shares
Line chart with the heading Global Marketplace 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 Global Marketplace Fund on September 29,
1994, before sales charge, and is equal to $15,980 as of February
29, 1996. The second line represents the Global Marketplace Fund
after sales charge and is equal to $15,177 as of February 29, 1996.
The third line represents the value of the Standard & Poor's 500
Stock Index and is equal to $14,352 as of February 29, 1996.
Global Marketplace Fund
Class B shares
Line chart with the heading Global Marketplace 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 hypothetical $10,000
investment made in the Global Marketplace Fund on January 25, 1996,
before contingent deferred sales charge, and is equal to $11,054
as of February 29, 1996 The second line represents the Global
Marketplace Fund after contingent deferred sales charge and is
equal to $10,554 as of February 29, 1996. The third line represents
the value of the Standard & Poor's 500 Stock Index and is equal to
$10,436 as of February 29, 1996.
<TABLE>
<CAPTION>
John Hancock Funds - Global Marketplace Fund
Financial Statements
The Statement of Assets and Liabilities is the Fund's balance sheet
and shows the value of what the Fund owns, is due and owes on February
29, 1996. 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 Assets and Liabilities
February 29, 1996 (Unaudited)
- -----------------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $808,216) $1,106,350
Joint repurchase agreement (cost - $140,000) 140,000
----------
1,246,350
Cash 8,928
Foreign currency, at value (cost - $18) 18
Receivable for shares sold 59,546
Dividends and interest receivable 183
Foreign tax receivable 102
Receivable from John Hancock Advisers, Inc. - Note B 54,545
Miscellaneous receivable 421
Deferred organization expenses - Note A 5,200
----------
Total Assets 1,375,293
- -----------------------------------------------------------------------------
Liabilities:
Payable for investments purchased 62,344
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 11,960
Accounts payable and accrued expenses 61,686
----------
Total Liabilities 135,990
- -----------------------------------------------------------------------------
Net Assets:
Capital paid-in 903,328
Accumulated net realized gain on investments
and foreign currency transactions 41,588
Net unrealized appreciation of investments
and foreign currency transactions 298,130
Accumulated net investment loss (3,743)
----------
Net Assets $1,239,303
=============================================================================
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 - $1,021,537/75,437 $13.54
=============================================================================
Class B** - $217,766/16,092 $13.53
=============================================================================
Maximum Offering Price Per Share *
Class A - ($13.54 x 105.26%) $14.25
=============================================================================
* 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.
** Class B shares commenced operations on January 22, 1996.
See Note to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows net gains
(losses) for the period stated.
Statement of Operations
Six months ended February 29, 1996 (Unaudited)
- ------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest $1,530
Dividends (net of foreign withholding taxes of $56) 1,087
--------
2,617
--------
Expenses:
Registration and filing fees 23,625
Custodian fee 19,692
Auditing fee 7,459
Investment management fee - Note B 3,354
Printing 3,044
Distribution/service fee - Note B
Class A 1,227
Class B ** 102
Transfer agent fee - Note B 1,256
Organization expense - Note A 724
Legal fees 298
Trustees' fees 62
Miscellaneous 62
--------
Total Expenses 60,905
- ------------------------------------------------------------------------
Less Expenses Reimbursable
by John Hancock Advisers, Inc.-
Note B (54,545)
--------
Net Expenses 6,360
- ------------------------------------------------------------------------
Net Investment Loss (3,743)
- ------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 55,013
Net realized loss on foreign currency transactions (1,002)
Change in net unrealized appreciation/depreciation
of investments 100,027
--------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions 154,038
- ------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $150,295
========================================================================
** Class B shares commenced operations on January 22, 1996.
See Note to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE
PERIOD
SEPTEMBER 29,
1994
(COMMENCEMENT
SIX MONTHS ENDED OF OPERATIONS)
FEBRUARY 29, 1996 TO
(UNAUDITED) AUGUST 31, 1995
---------- ---------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income (loss) ($3,743) $321
Net realized gain (loss) on investments sold and
foreign currency transactions 54,011 (12,743)
Change in net unrealized appreciation/
depreciation of investments and foreign currency transactions 100,027 198,103
---------- ----------
Net Increase in Net Assets Resulting from Operations
150,295 185,681
Distributions to Shareholders: ---------- ----------
Dividends from net investment income
Class A - (none and $0.0133 per share, respectively)
Class B ** - (none and none, respectively) -- (803)
Distributions in excess of net investment income -- --
Class A - (none and $0.0140 per share, respectively)
Class B ** - (none and none, respectively) -- (844)
-- --
Total Distributions to Shareholders ---------- ----------
-- (1,647)
From Fund Share Transactions - Net* ---------- ----------
377,408 27,566
Net Assets: ---------- ----------
Beginning of period
Initial Investment by John Hancock Advisers, Inc. - Note A 711,600 --
-- 500,000
End of period (including accumulated net ---------- ----------
investment loss of $3,743 and none, respectively) $1,239,303 $711,600
========== ==========
<CAPTION>
* Analysis of Fund Share Transactions: FOR THE PERIOD
SEPTEMBER 29, 1994
SIX MONTHS ENDED (COMMENCEMENT OF
FEBRUARY 29, 1996 OPERATIONS)
(UNAUDITED) TO AUGUST 31, 1995
--------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------- ------ -------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 16,690 $211,887 4,064 $36,313
Shares issued to shareholders in reinvestment of distributions -- -- 5 44
------ ------- ------ -------
16,690 211,887 4,069 36,357
Less shares repurchased (3,199) (41,177) (947) (8,791)
------ ------- ------ -------
Net increase 13,491 170,710 3,122 27,566
Initial Investment by John Hancock Advisers, Inc. - Note A -- -- 58,824 500,000
------ ------- ------ -------
Net increase 13,491 $170,710 61,946 $527,566
====== ======= ====== =======
CLASS B**
Shares sold 16,092 $206,698
Less shares repurchased -- --
------ ------
Net increase and shares outstanding, end of period 16,092 $206,698
====== ======
** Class B shares commenced operations on January 22, 1996.
The Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous
period. The difference reflects earnings less expenses, any investment and foreign currency gains and losses, distributions
paid to shareholders, 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 last two periods, along with the corresponding dollar values.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period indicated, investment returns,
key ratios and supplemental data are listed as follows:
- --------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 29, 1994
SIX MONTHS ENDED (COMMENCEMENT OF
FEBRUARY 29, 1996 OPERATIONS)
(UNAUDITED) TO AUGUST 31, 1995
------------ ------------------
<S> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $11.49 $8.50(a)
------ ------
Net Investment Income (Loss) (0.05) 0.01(b)
Net Realized and Unrealized Gain on Investments and Foreign
Currency Transactions 2.10 3.01
------ ------
Total from Investment Operations 2.05 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 $13.54 $11.49
====== ======
Total Investment Return at Net Asset Value (e) 17.84%(d) 35.61%(d)
Total Adjusted Investment Return at Net Asset Value (e)(f) 11.37%(d) 28.69%(d)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $1,022 $712
Ratio of Expenses to Average Net Assets 1.50%* 1.50%*
Ratio of Adjusted Expenses to Average Net Assets (c) 14.48%* 9.00%*
Ratio of Net Investment Income (Loss) to Average Net Assets (0.88%)* 0.06%*
Ratio of Adjusted Net Investment Loss to Average Net Assets (c) (13.86%)* (7.44%)*
Portfolio Turnover Rate 86% 63%
FOR THE PERIOD JANUARY 22, 1996
TO FEBRUARY 29, 1996 (UNAUDITED)
--------------------------------
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $11.95(a)
------
Net Investment Loss (0.02)(b)
Net Realized and Unrealized Gain on
Investments and Foreign
Currency Transactions 1.60
------
Total from Investment Operations 1.58
------
Net Asset Value, End of Period $13.53
======
Total Investment Return at Net Asset Value (e) 13.22%(d)
Total Adjusted Investment Return at Net Asset Value (e) (f) 11.94%(d)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $218
Ratio of Expenses to Average Net Assets 2.20%*
Ratio of Adjusted Expenses to Average Net Assets (c) 15.18%*
Ratio of Net Investment Loss to Average Net Assets (1.18%)*
Ratio of Adjusted Net Investment Loss to Average Net Assets (c) (14.16%)*
Portfolio Turnover Rate 86%
* On an annualized basis.
(a) Initial price to commence operations.
(b) On average month end shares outstanding.
(c) On an unreimbursed basis.
(d) Not annualized.
(e) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(f) An estimated total return calculation which takes into consideration fees and expenses waived or borne by the
Adviser during the periods shown.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Schedule of Investments is a complete list of all securities owned
by Global Marketplace Fund on February 29, 1996. It's dividend into two
main categories: common stocks and short-term investments. The common
stocks are further broken down by industry groups. Under each industry
group is a list of stocks owned by the Fund. Short-term investments,
which represent the Fund's "cash" position are listed last.
Schedule of Investments
February 29, 1996 (Unaudited)
- -------------------------------------------------------------------------
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK
Computers ( 7.82%)
America Online, Inc. * 600 $29,475
HNC Software, Inc. * 300 21,000
Raptor Systems, Inc. * 500 15,875
Red Brick Systems, Inc. * 600 30,600
----------
96,950
----------
Cosmetics & Personal Care ( 3.76%)
Estee Lauder Cos., Inc. (The) (Class A) 400 14,650
General Nutrition Cos., Inc. * 800 18,100
Revlon, Inc. (Class A) * 500 13,813
----------
46,563
----------
Furniture ( 2.02%)
Industrie Natuzzi Spa, American
Depositary Receipt, (ADR) (Italy) 500 25,000
----------
Medical ( 0.75%)
CNS, Inc. * 500 9,313
----------
Photo Equipment & Supplies ( 1.59%)
Grand Optical Photoservices (France) 200 19,704
----------
Retail - Apparel/Shoe Group ( 12.92%)
Authentic Fitness Corp. 1,000 27,875
De Rigo S. p. A. (Italy) * 700 19,425
Giordano International Ltd., (Hong Kong) 30,000 32,014
Gucci Group NV (Italy) * 500 21,000
Men's Wearhouse, Inc. (The) * 600 15,900
Oakley, Inc. * 700 24,063
Tommy Hilfiger Corp. * 500 19,813
----------
160,090
----------
Retail - Building Products ( 5.91%)
Castorama Dubois (France) 111 20,770
Home Centers (DIY) Ltd. (Israel) * 3,000 21,375
Orchard Supply Hardware Store * 800 18,600
Praktiker Bau - und Heimwerkemaerkte
AG (Germany) (R) * 500 12,549
----------
73,294
----------
Retail - Computers /Electronics ( 8.64%)
Circuit City Stores, Inc. 300 $8,887
CompUSA, Inc. * 500 20,000
Dixons Group PLC (United Kingdom) 5,000 35,473
Elkjop Norge a. s. (Norway) 700 14,213
Micro Warehouse, Inc. * 600 28,500
----------
107,073
----------
Retail - Discount & Variety ( 1.00%)
Warehouse Group Ltd. (The)
(New Zealand) 4,800 12,342
----------
Retail - Drug Stores ( 2.68%)
Eckerd Corp. * 300 13,462
Walgreen Co. 600 19,800
----------
33,262
----------
Retail - Food & Restaurants ( 4.03%)
Papa John's International, Inc. * 600 30,750
Rainforest Cafe, Inc. * 800 19,200
----------
49,950
----------
Retail - Mail Order/Direct ( 8.77%)
CUC International, Inc. * 450 14,569
Daisytek International Corp. * 800 24,000
Eastbay, Inc. * 1,000 17,000
Global DirectMail Corp. * 800 22,400
Seattle Filmworks, Inc. * 1,200 30,750
----------
108,719
----------
Retail - Major Department Stores ( 7.75%)
Federated Department Stores, Inc. * 300 9,075
Joyce Boutique Holdings (Hong Kong) 94,000 33,741
Kohl's Corp. * 300 18,562
Next, PLC (United Kingdom) 3,000 21,790
Strawbridge & Clothier (Class A) 500 12,875
----------
96,043
----------
Retail - Miscellaneous/Diversified ( 8.44%)
Garden Ridge Corp. * 500 $19,000
OfficeMax, Inc. * 750 16,125
PetSmart, Inc.* 600 20,850
PMT Services, Inc. * 1,000 18,250
Regal Cinemas, Inc. * 900 30,375
----------
104,600
----------
Retail - Supermarkets ( 7.26%)
Carrefour Supermarche (France) 40 27,010
Ito Yokado Co., Ltd., (ADR) (Japan) 100 22,387
Santa Isabel S. A., (ADR) (Chile) * 600 14,775
Vons Cos., Inc. * 900 25,875
----------
90,047
----------
Schools ( 1.94%)
Apollo Group, Inc.(Class A) * 600 24,000
----------
Textile ( 1.98%)
Mossimo, Inc. * 1,000 24,500
----------
Transportation Services ( 2.01%)
Central Parking Corp. 800 24,900
----------
TOTAL COMMON STOCK
(Cost $808,216) (89.27%) $1,106,350
----- ----------
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement ( 11.30%)
Investment in a joint repurchase
agreement transaction with
BT Securities Corp. - Dated 02-29-96,
due 03-01-96 (secured by
U.S. Treasury Bond,
12.50%, due 08-15-14; and
U.S. Treasury Note, 8.50%,
due 04-15-97) Note A 5.43% $140 $140,000
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $140,000) (11.30%) 140,000
------ ----------
TOTAL INVESTMENTS (100.57%) $1,246,350
====== ==========
*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.
(R) This security is exempt from registration under Rule 144A of the Securities Act of
1933. Such security may be resold, normally to qualified institutional buyers, in
transactions exempt from registration. Rule 144A security amounted to $12,549 as of
February 29, 1996. See Note A of the Notes to Financial Statements for valuation policy.
See notes to financial statments
</TABLE>
Financial Statements
Hancock Funds - Global Marketplace Fund
Country Diversification
(Unaudited)
- ----------------------------------------------------------------------
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 February 29, 1996 assigned
to the various countries.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
OF FUND'S
COUNTRY DIVERSIFICATION NET ASSETS
- ----------------------------------------------------------
Chile 1.19%
France 5.44
Germany 1.01
Hong Kong 5.31
Israel 1.72
Italy 5.28
Japan 1.81
New Zealand 1.00
Norway 1.15
United Kingdom 4.62
United States 72.04
------
TOTAL INVESTMENTS 100.57%
======
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Marketplace Fund
(UNAUDITED)
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
Marketplace Fund (the "Fund"), John Hancock Pacific Basin Equities Fund
and John Hancock Global Rx Fund. Prior to December 11, 1995, the Fund
was known as John Hancock Global Retail Fund. The investment objective
of the Fund is long-term capital appreciation through investments in a
global portfolio consisting of primarily equity securities of issuers
engaged in retail sales of consumer products and services.
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. On January
22, 1996, Class B shares of beneficial interest were sold to commence
class activity. 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.
FEDERAL INCOME TAXES The Fund intends to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investments, to its shareholders. Therefore, no federal
income tax provision is required. For Federal income tax purposes, net
currency exchange gains and losses from sales of foreign debt securities
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. Foreign income may be subject to foreign withholding
taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with income tax regulations, which may
differ from generally accepted accounting principals. Dividends paid by
the Fund with respect to each class of shares will be calculated in the
same manner, at the same time and will be in the same amount, except for
the effect of expenses that may be applied differently to each class as
explained previously.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual Fund. Expenses which are not identifiable
to a specific Fund are allocated in such a manner as deemed equitable,
taking into consideration, among other things, the nature and type of
expense and the relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized
gains (losses) are calculated at the Fund level and allocated daily to
each class of shares based on the appropriate net assets of the
respective classes. Distribution/service fees are calculated daily at
the class level based on the appropriate net assets of each class and
the specific expense rate(s )applicable to each class.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues, and expenses of the Fund.
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.
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 transactions, under which it intends to take delivery of
the foreign currency. Such contracts normally involve no market risk
other than the offset by the currency amount of the underlying
transaction.
There were no open forward foreign currency contracts at February
29,1996.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects
of fluctuations in interest rates, currency exchange rates and other
market conditions. At the time the Fund enters into a financial futures
contract, it is required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin",
equal to a certain percentage of the value of the financial futures
contract being traded. Each day, the futures contract is valued at the
official settlement price of the board of trade or U.S. commodities
exchange. Subsequent payments, known as "variation margin", to and from
the broker are made on a daily basis as the market price of the
financial futures contract fluctuates. Daily variation margin
adjustments, arising from this "mark to market", are recorded by the
Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there
may be an illiquid market and/or that a change in the value of the
contracts may not correlate with changes in the value of the underlying
securities.
For Federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures
contracts.
At February 29, 1996, there were no open positions in financial futures
contracts.
OPTIONS Listed options are valued at the last quoted sales price on the
exchange on which they are primarily traded. Over-the-counter options
are valued at the mean between the last bid and asked prices. Upon the
writing of a call or put option, an amount equal to the premium received
by the Fund is included in the Statement of Assets and Liabilities as an
asset and corresponding liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the
written option.
The Fund may use options contracts to manage its exposure to the stock
market. Writing puts and buying calls tend to increase the Fund's
exposure to the underlying instrument and buying puts and writing calls
tend to decrease the Fund's exposure to the underlying instrument, or
hedge other Fund investments.
The maximum exposure to loss for any purchased options 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 reflects 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
contacts' 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 risk and liquidity risks in
over-the-counter option contracts, the Fund will continuously monitor
the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's
period-end Statement of Assets and Liabilities.
There were no written option transactions for the period ended February
29, 1996.
ORGANIZATION EXPENSES Expenses incurred in connection with the
organization of the Fund have been capitalized and are being charged to
the Fund's operations ratably over a five year period that commenced
with the investment operations of the Fund.
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 the
Adviser's fee amounted to $54,545 for the period ended February 29,
1996. The Adviser reserves the right to terminate this limitation 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
February 29, 1996, net sales charges received with regard to Class A
shares amounted to $5,772. Out of this amount, $997 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, $1,600 was paid as sales commissions to sales personnel of
unrelated broker-dealers and $3,175 was paid as sales commissions to
personnel of John Hancock Distributors, Inc. ("Distributors"), Tucker
Anthony Incorporated ("Tucker Anthony") and Sutro & Co., Inc. ("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 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 February 29, 1996, there were no
contingent deferred sales charges.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a 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 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, Corp. ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. The Fund will pay Investors Services a fee
based on the number of shareholder accounts and certain out-of-pocket
expenses.
On March 26, 1996, the Board of Trustees approved retroactively to
January 1, 1996, an agreement with the Adviser to perform necessary tax
and financial management services for the Fund.
Messrs. Edward J. Boudreau, Jr. and Richard S. Scipione and Ms. Anne C.
Hodsdon 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 makes investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended February 29, 1996, aggregated
$627,983 and $378,825, respectively. There were no purchases or sales of
obligations of the U.S. government and its agencies during the period
ended February 29, 1996.
The cost of investments owned at February 29, 1996 (including the joint
repurchase agreement) for federal income tax purposes was $948,216.
Gross unrealized appreciation and depreciation of investments aggregated
$310,901 and $12,767, respectively, resulting in net unrealized
appreciation of $298,134.
Notes
John Hancock Funds - Global Marketplace Fund
Notes
John Hancock Funds - Global Marketplace Fund
A 1/2" by 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 reads: "A Global Investment Management Firm."
A recycled logo in lower left hand corner with the caption " Printed
on Recycled Paper."
John Hancock Funds
A Global Investment Management Firm
101 Huntington Avenue, Boston, MA 02199-7603
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 582
This report is for the information of shareholders of the John Hancock
Global Marketplace Fund. It may be used as sales literature when
preceded or accompanied by the current prospectus, which details
charges, investment objectives and operating policies.
Printed on Recycled Paper JHD 300SA 2/96
4/96
John Hancock Funds
Global Rx
Fund
SEMI-ANNUAL REPORT
February 29, 1996
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
Dennis S. Aronowitz
Richard P. Chapman, Jr.*
William J. Cosgrove*
Gail D. Fosler*
Anne C. Hodsdon
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
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 Investors Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02144-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
The stock market's record- breaking, whirlwind performance in 1995 will
be a tough act to follow in 1996. In fact, we've already seen greater
market volatility this year, particularly among last year's leaders --
technology stocks. That's to be expected after a year that saw market
indexes soar, including the Standard & Poor's 500- Stock Index's 37%
advance. While many of the same economic conditions that fostered the
stellar 1995 market are still in place - slow economic growth, muted
inflation and decent corporate earnings - it would be unrealistic to
expect the market to stage a repeat in 1996. The old saying "trees don't
grow to the sky" comes to mind. Shareholders would do well to temper
expectations of investment returns and perhaps revisit their investment
allocations with their financial advisor to determine if rebalancing
their portfolio makes sense.
No matter how you scale back your market expectations, you should always
be able to count on consistent customer service performance. At John
Hancock Funds, we never stop working to find ways to sustain and improve
the quality of information and assistance we provide you. Our commitment
to this task is no less than John Hancock's loyalty was to his fledgling
country when he is said to have uttered, "if it does the public good,
burn Boston." We won't go that far, of course, but we share our
namesake's dedication to putting the public before all else.
In our case, that public is you, our shareholders. We take very
seriously the role you have entrusted to us, that of helping you achieve
your financial goals. Part of that will always involve good customer
service. So please do not hesitate to call your Customer Service
Representative at 1-800-225-5291 if you have any questions or need
information. We take pride in helping you with the same spirit that John
Hancock displayed at the dawning of America.
Sincerely,
/S/ EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
By Linda Miller, Portfolio Manager
John Hancock
Global Rx Fund
Speedier FDA approvals, consolidations, calmer reform
environment boost health-care stocks
On January 1, 1996 Linda Miller took over as portfolio manager of John
Hancock Global Rx Fund. Ms. Miller joined John Hancock Funds in 1995 as
portfolio manager and chief health-care analyst after spending more than
10 years as an investment research analyst in the health-care group at
PaineWebber. She has also worked as an analyst for Alex Brown & Sons.
During the last six months, the stock market mostly continued its upward
trend as interest rates remained low and inflation stayed under control.
Health-care stocks were among the market leaders, benefiting from
positive developments in the industry. The debate over health-care
reform moderated. That drove stock prices higher both here and overseas.
Company consolidations continued, providing much- needed cost savings.
The Food & Drug Administration (FDA) accelerated the pace in approving
new drugs and products. Furthermore, technological improvements are
helping health-care providers save money and become more efficient.
Against that backdrop, John Hancock Global Rx Fund turned in impressive
returns on an absolute basis. For the six-month period ended February
29, 1996, the Fund's Class A and Class B shares posted total returns of
22.16% and 21.73%, respectively, at net asset value. By comparison, the
average health-care/biotechnology fund returned 25.60% for the period,
according to Lipper Analytical Services. (1)
A 2" x 3 1/2" photo of Linda Miller centered at bottom.
Caption reads: "Linda Miller, Portfolio Manager."
Linda Miller, Portfolio Manager
"During the
last six months....
health-care
stocks were
among the
market
leaders."
Chart with heading "Top Five Common Stock Holdings" at top left hand
column. The chart lists five holdings: HEALTHSOUTH 4.3%; Community
Health Systems 3.7%; HPR 3.5%; HBO & Co. 3.5%; Healthsource 3.3%.
As a percentage of net assets on February 29, 1996
"Drug
companies
performed
quite well
during
the period."
Strategy: re-allocating assets across more sectors
The Fund's performance relative to its peers can be attributed to its
being somewhat underweighted in certain health-care sectors -
specifically in the more aggressive drug, medical device and
biotechnology areas. As discussed in our report to shareholders six
months ago, we embarked on a plan to re-balance the portfolio across a
broader array of sectors, and those efforts have continued. By the end
of February, we had allocated greater asset weightings to the drug,
medical device and biotechnology areas, as well as to international
stocks. The process of re- balancing the portfolio has involved adding
some larger, more familiar companies that are leaders in their fields,
as long as we can buy them at a good price. In addition to these larger,
generally steady players, we're still very interested in companies with
innovative products and services. As a result, we're continuing to add
small, niche players where we see the potential for strong growth.
Table entitled "Scorecard" at bottom of left hand column. The header for
the left column is "Investment"; the header for the right column is
"Recent performance ... and what's behind the numbers." The first
listing is HBO & Co. followed by an up arrow and the phrase "Strong
demand for hospital information systems." The second listing is Omnicare
followed by an up arrow and the phrase "Cost efficient delivery of
pharmaceuticals." The third listing is Health Management Associates
followed by a flat arrow and the phrase "Acute-care hospitals face excess
capacity." Footnote below reads: "See "Schedule of Investments.
"Investment holdings are subject to change.
In line with bolstering our medical device and product company holdings,
we maintained our existing positions in two industry leaders, Boston
Scientific, a specialist in cardiovascular devices which has grown
through a series of acquisitions; and Stryker, a leader in orthopedic
devices. Stocks we added include Guidant, Medtronic and Sofamor Danek.
The cardiovascular device industry has been growing rapidly and new
technology often is rewarded with quick and widespread acceptance, since
many such devices are used for treatment of life-threatening situations.
Consolidation is also an issue here and we wanted to own the larger
firms which could continue to post strong returns through both internal
growth and acquisitions. In keeping with that philosophy, we eliminated
a cardiovascular company, Ventritex, which we felt was lagging in new
product introductions.
Drug companies and cost savers produce results
Drug companies performed quite well during the period. The speed-up in
FDA approvals has been a boon for drug companies as new products are
coming to market faster. We added several new names and increased our
positions in some existing holdings to increase our overall position in
drug stocks where we were slightly underweighted. Again, we bought
larger, well known names to add balance to the portfolio. For instance,
we purchased Eli Lilly, whose recent FDA approvals for new diabetes,
schizophrenia and cancer drugs should help boost the company's growth.
Merck, another new addition, just received approval for new drugs for
AIDS and osteoporosis. We also added to our existing position in
Sweden-based Astra, another company with good new product flow. Our
positions in generic drug companies also served us well during the
period, although we scaled back some and added others as companies
rotated in and out of favor. After taking some profits, we sold our
position in Teva as the price seemed to be getting ahead of the value.
Meanwhile we added to our stake in drug delivery companies such as Alza
and Ireland-based Elan; and in biotechnology and drug delivery companies
such as Dura, GelTex and Intercardia.
Bar chart with heading " Fund Performance" at top of left hand column.
Under the heading is the footnote: "For the six months ended February
29, 1996." The chart is scaled in increments of 5% from bottom to top,
with 30% at the top and 0% at the bottom. Within the chart, there are
three solid bars. The first represents the 22.16% total return for
John Hancock Global Rx Fund: Class A. The second represents the 21.73%
total return for John Hancock Global Rx Fund: Class B. The third
represents the 25.60% total return for the average health-care/
biotechnology fund. The footnote below states: "Total returns for
John Hancock Global Rx Fund are at net asset value with all
distributions reinvested. The average health-care/biotechnology
fund is tracked by Lipper Analytical Services. (1) See following
page for historical performance information."
Total returns for John Hancock Global Rx Fund are at net asset value
with all distributions reinvested. The average health-care/biotechnology
fund is tracked by Lipper Analytical Services. (1)See following page for
historical performance information.
HMO and physician practice management groups have rebounded recently
despite continuing government and cost concerns. One interesting twist
we took was to buy a dental HMO, United Dental. We expect to see more
employers offering this option, and dental HMOs don't face the same
issues as large medical HMO companies regarding costs and
Medicaid/Medicare concerns. In fact, we eliminated two of our medical
HMO positions, Coventry and Physician Corporation of America, during the
period because of pricing challenges.
Cost control issues have also led us to buy larger health-care service
companies. These firms are scrambling to grab market share in local and
national markets in their race for revenues. Larger firms appear to have
the edge because they are better able to spread the costs associated
with moving into new regional markets. Here too, we wanted a leader, so
we added Columbia, the largest player in the hospital management field.
Within the hospital services arena, we are focused on companies that
help doctors and hospitals improve efficiency and track costs, often
through technology enhancements. HBO & Co., the leader in this field,
remains one of our favorites and is a core holding in the portfolio. We
have supplemented it with interesting niche companies such as Mecon, a
software company with a strong product that works with hospitals on cost
accounting and improving efficiency; and HPR Inc., which focuses on
clinical standards.
"...there are
still solid
reasons
why we
remain
optimistic
about
health-care
stocks."
What's ahead
It would certainly be unrealistic to expect the U.S. stock market to
repeat its stellar 1995 performance this year. We can probably expect
the volatility that has marked these first two months to continue. But
there are still solid reasons why we remain optimistic about health-
care stocks. The drive toward cost control, driven by employers and the
government, will continue and may even accelerate as we get deeper into
the election year and the rhetoric picks up. This environment may help
companies start, or continue, to become more efficient and profitable.
At the same time, the ongoing improvement in FDA approval times should
further benefit the drug and device sector. And as always, demographic
trends, particularly an aging population here and abroad, favor
increased expenditures on health services worldwide.
This commentary reflects the views of the portfolio manager through the
end of the Fund's period discussed in this report. Of course, the
manager's views are subject to change as market and other conditions
warrant.
(1) Figures from Lipper Analytical Services include reinvested dividends
and do not take into account sales charges. Actual load-adusted
performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Global Rx Fund. Total
return is a performance measure that equals the sum of all income and
capital gains dividends, assuming reinvestment of these distributions,
and the change in the price of the Fund's shares, expressed as a
percentage of the Fund's net asset value per share. Performance figures
include the maximum applicable sales charge of 5% for Class A shares.
The effect of the maximum contingent deferred sales charge for Class B
shares (maximum 5% and declining to 0% over six years) is included in
Class B performance. Performance is affected by a 12b-1 plan, which
commenced on October 1, 1991 and March 7, 1994 for Class A and Class B
shares, respectively. Remember that all figures represent past
performance and are no guarantee of how the Fund will perform in the
future. Also, keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
CUMULATIVE TOTAL RETURNS
For the period ended December 31, 1995
One Life of
Year Fund
------ ------
John Hancock Global Rx Fund:
Class A(1) 32.88% 132.07%
John Hancock Global Rx Fund:
Class B(2) 33.67% 35.31%
AVERAGE ANNUAL TOTAL RETURNS
For the period ended December 31, 1995
One Life of
Year Fund
------ ------
John Hancock Global Rx Fund:
Class A(1) 32.88% 21.91%
John Hancock Global Rx Fund:
Class B(2) 33.67% 17.97%
Notes to Performance
(1) Class A shares started on October 1, 1991.
(2) Class B shares started on March 7, 1994.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in John
Hancock Global Rx Fund would be worth on February 29, 1996, assuming you
invested on the day each class of shares started and have 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.
PERFORMANCE CHART INFO HERE
Global Rx Fund
Class A shares
Line chart with the heading Global Rx Fund: Class A, representing the
growth of a hypothetical $10,000 investment over the life of the fund.
Within the chart are three lines.
The first line represents the Global Rx Fund after sales charge and is
equal to $26,367 as of February 29, 1996. The second line represents
the value of the hypothetical $10,000 investment made in the Global Rx
Fund on October 1, 1991, before sales charge, and is equal to $26,357
as of February 29, 1996. The third line represents the value of the
Standard & Poor's 500 Stock Index and is equal to $18,664 as of
February 29, 1996.
Global Rx Fund
Class B shares
Line chart with the heading Global Rx Fund: Class B, representing the
growth of a hypothetical $10,000 investment over the life of the fund.
Within the chart are three lines.
The first line represents the value of the hypothetical $10,000
investment made in the Global Rx Fund on March 7, 1994, before
contingent deferred sales charge, and is equal to $15,031 as of
February 29, 1996.
The second line represents the value of the Standard & Poor's 500
Stock Index and is equal to $14,631 as of February 29, 1996. The
third line represents the Global Rx Fund after contingent deferred
sales charge and is equal to $14,456 as of February 29, 1996.
<TABLE>
<CAPTION>
Financial Statements.
John Hancock Funds - Global Rx Fund
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on February 29,
1996. You'll also find the net asset value and the maximum offering
price per share as of that date.
Statement of Assets and Liabilities
February 29, 1996 (Unaudited)
- -----------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks, warrants and units
(cost - $27,844,903) $46,622,456
Joint repurchase agreement (cost - $10,380,000) 10,380,000
-----------
57,002,456
Cash 977
Foreign currency, at value (cost - $1,260) 1,213
Receivable for shares sold 801,108
Receivable for investments sold 1,357,513
Interest receivable 1,565
Dividends receivable 11,495
Foreign tax receivable 1,385
Other assets 1,159
Deferred organization expenses - Note A 4,812
-----------
Total Assets 59,183,683
- -----------------------------------------------------------------------
Liabilities:
Payable for investments purchased 1,998,263
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 95,496
Accounts payable and accrued expenses 185,534
-----------
Total Liabilities 2,279,293
- -----------------------------------------------------------------------
Net Assets:
Capital paid-in 37,795,910
Accumulated net realized gain on investments
and foreign currency transactions 589,106
Net unrealized appreciation of investments
and foreign currency transactions 18,777,572
Accumulated net investment loss (258,198)
-----------
Net Assets $56,904,390
=======================================================================
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 - $34,718,725 / 1,323,078 $26.24
=======================================================================
Class B - $22,185,665 / 858,900 $25.83
=======================================================================
Maximum Offering Price Per Share *
Class A - ($26.24 x 105.26%) $27.62
=======================================================================
*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.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income earned
and expenses incurred in operating the Fund. It also shows net gains (losses)
for the period stated.
Statement of Operations
Six months ended February 29, 1996 (Unaudited)
- ------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest $204,573
Dividends (net of foreign withholding taxes of $445) 18,273
----------
222,846
----------
Expenses:
Investment management fee - Note B 164,585
Distribution/service fee - Note B
Class A 43,274
Class B 61,486
Transfer agent fee - Note B 99,660
Custodian fee 32,780
Registration and filing fees 24,586
Auditing fee 23,091
Advisory board fee - Note B 16,494
Printing 5,980
Organization expense - Note A 4,091
Trustees' fees 2,361
Legal fees 2,062
Miscellaneous 594
----------
Total Expenses 481,044
- ------------------------------------------------------------------------
Net Investment Loss (258,198)
- ------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 590,039
Net realized loss on foreign currency transactions (891)
Change in net unrealized appreciation/depreciation
of investments 8,303,652
Change in net unrealized appreciation/depreciation
of foreign currency transactions (40)
----------
Net Realized and Unrealized Gain
on Investments and Foreign
Currency Transactions 8,892,760
- ------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $8,634,562
========================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31,
(UNAUDITED) 1995
---------- ----------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($258,198) ($506,007)
Net realized gain on investments sold and
foreign currency transactions 589,148 1,224,533
Change in net unrealized appreciation/depreciation
of investments and foreign currency transactions 8,303,612 5,931,154
----------- -----------
Net Increase in Net Assets Resulting from Operations 8,634,562 6,649,680
----------- -----------
Distributions to Shareholders:
Distributions from net realized gain on investments
sold and foreign currency transactions
Class A -- ($0.1437 and none per share, respectively) (175,093) --
Class B -- ($0.1437 and none per share, respectively) (80,096) --
----------- -----------
Total Distributions to Shareholders (255,189) --
----------- -----------
From Fund Share Transactions - Net* 17,797,536 4,364,193
----------- -----------
Net Assets:
Beginning of period 30,727,481 19,713,608
----------- -----------
End of period (including accumulated net
investment loss of $258,198 and none, respectively) $56,904,390 $30,727,481
=========== ===========
<CAPTION>
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
FEBRUARY 29, 1996 YEAR ENDED AUGUST 31,
(UNAUDITED) 1995
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 1,355,890 $32,649,824 517,942 $9,800,086
Shares issued to shareholders in reinvestment
of distributions 7,127 168,966 -- --
-------- ----------- -------- ----------
1,363,017 32,818,790 517,942 9,800,086
Less shares repurchased (1,168,834) (28,308,690) (517,990) (9,686,022)
-------- ----------- -------- ----------
Net increase (decrease) 194,183 $4,510,100 (48) $114,064
======== =========== ======== ==========
CLASS B
Shares sold 730,540 $17,113,521 451,492 $8,736,819
Shares issued to shareholders in reinvestment
of distributions 3,080 71,992 -- --
-------- ----------- -------- ----------
733,620 17,185,513 451,492 8,376,819
Less shares repurchased (171,322) (3,898,077) (219,936) (4,126,690)
-------- ----------- -------- ----------
Net increase 562,298 $13,287,436 231,556 $4,250,129
======== =========== ======== ==========
The Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the
previous period. The difference reflects earnings less expenses, any investment and foreign currency gains and losses,
distributions paid to shareholders, 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 last two periods, along with the
corresponding dollar values.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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:
- ------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
OCTOBER 1, 1991
(COMMENCEMENT
SIX MONTHS ENDED YEAR ENDED AUGUST 31, OF OPERATIONS)
FEBRUARY 29, 1996 ---------------------------------------- T0 AUGUST 31,
(UNAUDITED) 1995 1994 1993 1992
------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $21.61 $16.51 $13.38 $13.34 $10.00(a)
------ ------ ------ ------ ------
Net Investment Loss (0.12)(a) (0.36)(b) (0.32) (0.23) (0.03)
Net Realized and Unrealized Gain on
Investments and
Foreign Currency Transactions 4.89 5.46 3.45 0.27 3.37
------ ------ ------ ------ ------
Total from Investment Operations 4.77 5.10 3.13 0.04 3.34
------ ------ ------ ------ ------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and
Foreign Currency Transactions (0.14) -- -- -- --
------ ------ ------ ------ ------
Net Asset Value, End of Period $26.24 $21.61 $16.51 $13.38 $13.34
======= ======= ======= ======= =======
Total Investment Return at Net
Asset Value (d) 22.16%(e) 30.89% 23.39% 0.30% 33.40%(e)
Total Adjusted Investment Return at
Net Asset Value (d)(f) -- -- -- 0.04% 32.11%(e)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $34,719 $24,394 $18,643 $15,647 $14,702
Ratio of Expenses to Average Net Assets 2.14%* 2.56% 2.55% 2.50% 1.98%*
Ratio of Adjusted Expenses to Average
Net Assets (d) -- -- -- 2.76% 3.39%*
Ratio of Net Investment Loss to Average
Net Assets (1.08%)* (1.99%) (2.01%) (1.67%) (0.51%)*
Ratio of Adjusted Net Investment Loss to
Average Net Assets (d) -- -- -- (1.93%) (1.92%)*
Portfolio Turnover Rate 12% 38% 52% 93% 48%
The Financial Highlights summarizes the impact of the following factors on a single share for the period indicated: net
investment loss, gains (losses), distributions and total investment return of the Fund. It shows how the Fund's net asset
value for a share has changed since the end of the previous period. Additionally, important relationships between some
items presented in the financial statements are expressed in ratio form.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
- ----------------------------------------------------------------------------------------------------------
FOR THE PERIOD
MARCH 7,1994
(COMMENCEMENT)
SIX MONTHS ENDED YEAR ENDED OF OPERATIONS
FEBRUARY 29, 1996 AUGUST 31, TO AUGUST 31,
(UNAUDITED) 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $21.35 $16.46 $ 17.29(a)
-------- -------- --------
Net Investment Loss (0.19)(b) (0.55)(b) (0.17)(b)
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions 4.81 5.44 (0.66)(c)
-------- -------- --------
Total from Investment Operations 4.62 4.89 (0.83)
-------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and Foreign Currency Transactions (0.14) -- --
-------- -------- --------
Net Asset Value, End of Period $25.83 $21.35 $16.46
-------- -------- --------
Total Investment Return at Net Asset Value (d) 21.73%(e) 29.71% (4.80%)(e)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $22,185 $6,333 $1,071
Ratio of Expenses to Average Net Assets 2.79%* 3.45% 3.34%*
Ratio of Net Investment Loss to Average Net Assets (1.65%)* (2.91%) (2.65%)*
Portfolio Turnover Rate 12% 38% 52%
* On an annualized basis.
(a) Initial price at commencement of operations.
(b) On average month end shares outstanding.
(c) May not accord to amounts shown elsewhere in the financial statements due to the timing of sales and
repurchases of fund shares in relation to fluctuating
market values of the investments of the Fund.
(d) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(e) Not annualized.
(f) An estimated total return calculation which takes into consideration fees and expenses waived or borne
by the Adviser during the periods shown.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
February 29, 1996 (Unaudited)
- -----------------------------------------------------------------------------
NUMBER OF MARKET
ISSUER,DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
Drugs-Biotechnology ( 2.10%)
GelTex Pharmaceuticals, Inc.* 15,000 $273,750
Intercardia, Inc.* 19,000 446,500
Serologicals Corp.* 25,000 475,000
----------
1,195,250
----------
Drugs-Delivery ( 3.10%)
Alza Corp.* 25,000 831,250
Elan Corp., plc American Depository
Receipt (ADR) (Ireland)* 10,000 580,000
Liposome Co., Inc.* 20,000 350,000
----------
1,761,250
----------
Drugs-Generic ( 3.52%)
Dura Pharmaceuticals, Inc.* 25,000 1,043,750
Fujisawa Pharmaceutical Co. (Japan) 40,000 380,608
Schwarz Pharma AG (Germany)* 10,000 578,153
----------
2,002,511
----------
Drugs-Major ( 9.85%)
Astra AB (Ser B) (Sweden) 35,000 1,601,653
Johnson & Johnson 4,000 374,000
Lilly, (Eli) & Co. 10,000 605,000
Merck & Co., Inc. 12,000 795,000
Pfizer Inc. 8,000 527,000
Roche Holding AG (Switzerland) 100 777,379
Sandoz AG (ADR) (Switzerland) 12,000 563,697
Schering AG (Germany) 5,000 363,216
----------
5,606,945
----------
Healthcare-Alternate Site ( 7.62%)
Assisted Living Concepts Inc.* 15,000 288,750
HEALTHSOUTH Corp.* 70,000 2,450,000
Lincare Holdings, Inc.* 20,000 625,000
Pediatric Services of America, Inc.* 20,000 460,000
Renal Treatment Centers, Inc.* 5,000 219,375
Total Renal Care Holdings, Inc.* 5,000 147,500
Vivra, Inc.* 5,000 147,500
----------
4,338,125
----------
Healthcare-HMO ( 6.10%)
Healthsource, Inc.* 50,000 1,893,750
Humana Inc.* 40,000 980,000
OccuSystems Inc.* 12,500 243,750
United Dental Care, Inc.* 10,000 355,000
----------
3,472,500
----------
Healthcare-Management ( 14.53%)
AmeriSource Health Corp. (Class A)* 20,000 $560,000
Cardinal Health, Inc. 30,000 1,807,500
Cohr, Inc.* 45,000 630,000
CRA Managed Care, Inc.* 15,000 476,250
Impath, Inc.* 18,500 289,062
MedPartners / Mullikin, Inc.*
(formerly MedPartners, Inc.) 30,000 900,000
NCS HealthCare, Inc.* 6,500 164,125
Omnicare, Inc. 20,000 965,000
PhyCor, Inc.* 33,750 1,518,750
Physician Reliance Network, Inc.* 15,000 660,000
RTW, Inc.* 10,000 297,500
----------
8,268,187
----------
Healthcare-Software/Services ( 11.33%)
HBO & Co. 20,000 1,980,000
Health Management Systems, Inc.* 22,500 658,125
HPR Inc.* 54,000 1,998,000
MDL Information Systems, Inc.* 40,000 925,000
Mecon, Inc.* 12,500 240,625
Molecular Devices Corp.* 15,000 180,000
PHAMIS, Inc.* 20,000 465,000
----------
6,446,750
----------
Hospital Management ( 7.05%)
Columbia / HCA Healthcare Corp. 10,000 547,500
Community Health Systems, Inc.* 50,000 2,093,750
Health Management
Associates, Inc. (Class A) * 43,750 1,372,656
----------
4,013,906
----------
Medical Devices and Products ( 14.52%)
Boston Scientific Corp.* 25,000 1,200,000
ESC Medical Systems Ltd.* (Israel) 7,500 246,563
Guidant Corp. 10,000 473,750
Gynecare, Inc.* 30,000 $288,750
IDEXX Laboratories, Inc.* 30,000 1,432,500
i-STAT Corp.* 40,000 1,520,000
Medtronic, Inc. 10,000 573,750
Metra Biosystems, Inc.* 40,000 600,000
NeoPath, Inc.* 25,000 587,500
Sofamor Danek Group, Inc.* 10,000 326,250
Steris Corp.* 20,000 685,000
Stryker Corp.* 6,000 325,500
----------
8,259,563
----------
Nursing Homes ( 2.08%)
Health Care and Retirement Corp.* 15,000 609,375
Manor Care, Inc. 15,000 575,625
----------
1,185,000
----------
TOTAL COMMON STOCK
(Cost $27,814,651) (81.80%) 46,549,987
------ ----------
NUMBER OF
WARRANTS, UNITS
---------------
WARRANTS AND UNITS
Drugs-Biotechnology ( 0.12%)
Oxigene, Inc. (Warrants)* 15,000 65,625
----------
Drugs-Generic ( 0.01%)
Therapeutic Discovery Corp. (Units)* 750 6,844
----------
(0.13%) 72,469
------ ----------
(81.93%) 46,622,456
------ ----------
<CAPTION>
PER VALUE
INTEREST (000'S MARKET
ISSUER,DESCRIPTION RATE OMMITTED) VALUE
- ------------------ ---------- ---------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT
Joint Repurchase Agreement ( 18.24%)
Investment in a joint
repurchase agreement
transaction with BT Securities
Corp. - Dated 2-29-96,
Due 3-01-96 (Secured
by U.S. Treasury Bond,
12.50% due 8-15-14;
and U.S. Treasury Note,
8.50%, due 4-15-97) -
Note A 5.43% $10,380 $10,380,000
-----------
TOTAL SHORT-TERM INVESTMENT (18.24%) 10,380,000
------- -----------
TOTAL INVESTMENT (100.17%) $57,002,456
======= ===========
* 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.
See notes to financial statements
</TABLE>
John Hancock Funds - Global Rx Fund
Financial Statements
The Global Rx Fund invests primarily in equity securities of issuers in
the health care industry in the United States and abroad. The
concentration of investments by industry category for individual
securities held by the Fund is shown in the schedule of investments. In
addition, concentration of investments can be aggregated by various
countries. The table below shows the percentage of the Fund's investment
at February 29, 1996 assigned to the various country categories.
Portfolio Concentration (Unaudited)
- -------------------------------------------
MARKET VALUE AS A
COUNTRY DIVERSIFICATION % OF NET ASSETS
- -------------------------------------------
Germany 1.65%
Ireland 1.02%
Israel 0.43%
Japan 0.67%
Sweden 2.81%
Switzerland 2.36%
United States 91.23%
-------
TOTAL INVESTMENTS 100.17%
=======
See notes to financial statements.
Notes to Financial Statements
John Hancock Funds - Global Rx Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock World Fund (the "Trust") is an open- end management
investment company, registered under the Investment Company Act of 1940.
The Trust consists of three series portfolios: John Hancock Global Rx
Fund (the "Fund"), John Hancock Pacific Basin Fund and John Hancock
Global Marketplace Fund. Prior to December 11, 1995, John Hancock Global
Marketplace Fund was known as John Hancock Global Retail Fund. The
investment objective of the Fund is to achieve long-term capital
appreciation through investments in an international portfolio
consisting primarily of equity securities of issuers in the health care
industry.
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 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 its taxable income,
including any net realized gain on investments, to its shareholders.
Therefore, no federal income tax provision is required. For federal
income tax purposes, net currency exchange gains and losses from sales
of foreign debt securities must be treated as ordinary income even
though such items are gains and losses for accounting purposes.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date, or, in the case of some
foreign securities, on the date thereafter when the Fund is made aware
of the dividend. Interest income on investment securities is recorded on
the accrual basis. Foreign income may be subject to foreign withholding
taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex- dividend date. Such distributions
are determined in conformity with income tax regulations, which may
differ from generally accepted accounting principals. Dividends paid by
the Fund with respect to each class of shares will be calculated in the
same manner, at the same time and will be in the same amount, except for
the effect of expenses that may be applied differently to each class as
explained previously.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual Fund. Expenses which are not identifiable
to a specific Fund are allocated in such a manner as deemed equitable,
taking into consideration, among other things, the nature and type of
expense and the relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized
gains (losses) are calculated at the Fund level and allocated daily to
each class of shares based on the appropriate net assets of the
respective classes. Distribution/service fees are calculated daily at
the class level based on the appropriate net assets of each class and
the specific expense rate(s) applicable to each class.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues, and expenses of the Fund.
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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into
forward foreign currency exchange contracts as a hedge against the
effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date at a set price. The aggregate
principal amounts of the contracts are marked-to- market daily at the
applicable foreign currency exchange rates. Any resulting unrealized
gains and losses are included in the determination of the Fund's daily
net assets. The Fund records realized gains and losses at the time the
forward foreign currency contract is closed out or offset by a matching
contract. Risks may arise upon entering these contracts from potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities. The Fund may also purchase and sell forward contracts to
facilitate the settlement of foreign currency denominated portfolio
transactions, under which it intends to take delivery of the foreign
currency. Such contracts normally involve no market risk other than the
offset by the currency amount of the underlying transaction.
There were no open forward foreign currency contracts at February
29,1996.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects
of fluctuations in interest rates, currency exchange rates and other
market conditions. At the time the Fund enters into a financial futures
contract, it is required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin",
equal to a certain percentage of the value of the financial futures
contract being traded. Each day, the futures contract is valued at the
official settlement price of the board of trade or U.S. commodities
exchange. Subsequent payments, known as "variation margin", to and from
the broker are made on a daily basis as the market price of the
financial futures contract fluctuates. Daily variation margin
adjustments, arising from this "mark to market", are recorded by the
Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there
may be an illiquid market and/or that a change in the value of the
contracts may not correlate with changes in the value of the underlying
securities.
For Federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures
contracts.
At February 29, 1996, there were no open positions in financial futures
contracts.
OPTIONS Listed options are valued at the last quoted sales price on the
exchange on which they are primarily traded. Over-the-counter options
are valued at the mean between the last bid and asked prices. Upon the
writing of a call or put option, an amount equal to the premium received
by the Fund is included in the Statement of Assets and Liabilities as an
asset and corresponding liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the
written option.
The Fund may use options contracts to manage its exposure to the stock
market. Writing puts and buying calls tend to increase the Fund's
exposure to the underlying instrument and buying puts and writing calls
tend to decrease the Fund's exposure to the underlying instrument, or
hedge other Fund investments.
The maximum exposure to loss for any purchased options 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 reflects 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
contacts' 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 risk and liquidity risks in
over-the-counter option contracts, the Fund will continuously monitor
the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's
period-end Statement of Assets and Liabilities.
There were no written option transactions for the period ended February
29, 1996.
ORGANIZATION EXPENSES Expenses incurred in connection with the
organization of the Fund have been capitalized and are being charged to
the Fund's operations ratably over a five-year period that commenced
with the investment operations of the Fund.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on
securities purchased from either the date of issue or the date of
purchase over the life of the security, as required by the Internal
Revenue Code.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment
program equivalent, on an annual basis, to the sum of (a) 0.80% of the
first $200,000,000 of the Fund's average daily net asset value and (b)
0.70% of the Fund's average daily net asset value in excess of
$200,000,000.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive
state limit where the Fund is registered to sell shares of beneficial
interest, the fee payable to the Adviser will be reduced to the extent
of such excess, and the Adviser will make additional arrangements
necessary to eliminate any remaining excess expenses. The current limits
are 2.5% of the first $30,000,000 of the Fund's average daily net asset
value, 2.0% of the next $70,000,000, and 1.5% of the remaining average
daily net asset value.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. For the period ended
February 29, 1996, net sales charges received with regard to Class A
shares amounted to $150,317. Out of this amount, $22,421 was retained
and used for printing prospectuses, advertising, sales literature and
other purposes, $46,428 was paid as sales commissions to sales personnel
of unrelated broker-dealers and $81,468 was paid as sales commissions to
personnel of John Hancock Distributors, Inc. ("Distributors"), Tucker
Anthony Incorporated ("Tucker Anthony") and Sutro & Co., Inc. ("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 Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining
rates beginning at 5.0% of the lesser of the current market value at the
time of redemption or the original purchase cost of the shares being
redeemed. Proceeds from CDSC are paid to JH Funds and are used in whole
or in part to defray its expenses related to providing distribution
related services to the Fund in connection with the sale of Class B
shares. For the period ended February 29, 1996, contingent deferred
sales charges paid to Broker Services amounted to $8,791.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution
Plan with respect to Class A 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 such payments
may be service fees as defined by the amended Rules of Fair Practice of
the National Association of Securities Dealers. Under the amended Rules
of Fair Practice, curtailment of a portion of the Fund's 12b-1 payments
could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly- owned subsidiary
of The Berkeley Financial Group. Prior to October 1, 1995, the Fund paid
transfer agent fees as a class specific expense based on the number of
shareholder accounts and certain out- of-pocket expenses. For the one
month ended September 30, 1995, the transfer agent expense, calculated
as a class specific expense, was $6,588 for Class A shares and $2,601
for Class B shares, respectively. Effective October 1, 1995, transfer
agent expense is a fund expense.
On March 26, 1996, the Board of Trustees approved, retroactively to
January 1, 1996, an aggreement with the Adviser to perform necessary tax
and financial management services for the Fund.
The Fund has an independent advisory board composed of scientific and
medical experts who provide the investment officers of the Fund with
advice and consultation on health care developments, for which the Fund
pays the advisory board a fee.
Messrs. Edward J. Boudreau, Jr. and Richard S. Scipione and Ms. Anne C.
Hodsdon are directors and/or officers of the Adviser, and/or its
affiliates, as well as Trustees of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. Effective with the fees paid
for 1995, the unaffiliated Trustees may elect to defer for tax purposes
their receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended February 29, 1996, aggregated
$12,280,837 and $4,306,867, respectively. There were no purchases or
sales of obligations of the U.S. government and its agencies during the
period ended February 29, 1996.
The cost of investments owned at February 29, 1996 (including the joint
repurchase agreement) for federal income tax purposes was $38,224,903.
Gross unrealized appreciation and depreciation of investments aggregated
$19,028,736 and $251,183, respectively, resulting in net unrealized
appreciation of $18,777,553.
John Hancock Funds - Global Rx Fund
Notes
A 1/2" by 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 reads:
"A Global Investment Management Firm."
John Hancock Funds
A Global Investment Management Firm
101 Huntington Avenue, Boston, MA 02199-7603
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 582
This report is for the information of shareholders of the John Hancock
Global Rx Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
Printed on Recycled Paper JHD 280SA 2/96
4/96
